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     "transcription": "Good morning and welcome, everyone. Together with our CFO, Lisa Mortensen, inaudible team, we would like to wish everybody a happy new year and hope you and your families are healthy and safe. As always, we will start this conference call with a short presentation on our recent quarter's results. In addition, this time, we would like to also take the opportunity to present our new science based climate targets that were published in November. This will take approximately 20 minutes, and then we will move on to Q&A. Before we begin, please take notice of the Safe Harbor statement on Slide 2. Let's turn to Slide 3, please. Chr. Hansen delivered a solid start to the fiscal year ' 22, with 9% organic growth, with Euro growth reached 10%. Growth was fully volume driven and supported by solid growth in food cultures and enzymes, as well as a strong rebound in health and nutrition. Our EBIT margin before special items was 24.4% compared to 25.2% last year. Excluding HMO, which was not fully reflected in Q1 last year, we both have seen a margin improvement, a scalability from solid sales performance more than offset the inflationary pressure and the general ramp up of activities. Absolute EBIT before special items amounted to EUR 65 million, up 7% from the EUR 61 million in Q1 last year. Free cash flow before acquisitions and special items was EUR 65 million compared to minus EUR 7 million last year. Let's turn to Slide 4 for the strategic and operational highlights. During the first quarter, in-person engagement with customers picked up again and we saw good traction on our commercial pipeline and strategic initiatives. Our core businesses, food cultures and enzymes, human health and animal health grew 7% for our growth areas, which account for approximately 10% of group revenue. Buyer protection, fermented plant basis, plant health and HMO grew 35%. Lighthouses are expected to outgrow the core business for the year, but please note that the very strong growth in Q1 was in part positive due to other timing. In line with our 2025 strategy, we continue to reinvest in our core business and lever our tech- technology platforms to expand into new areas while further reaping the benefits of our recent acquisitions. Let me briefly comment on the key highlights for the quarter. In food cultures and enzymes, we saw very good sales project execution in EMEA, as well as continued strong growth in the cheese market in North America, which led very solid volume growth in Q1. Human health exceeded our expectations for the first quarter and deliver a very strong start to the year, supported by a rebound in the traditional sales channel in Europe and North America and positive order timing from Q4. Further, I am pleased that with our expanded strength to solution offering and our strong supply chain performance, we were able to mitigate supply strength successfully and win new business, which will have a positive impact in the first half of the year. Our HMO business also reported good progress in the first\u2026 uh, with the first launches of the five HMO mix in the U.S. market, which had an extraordinary impact in Q1 as customers ramped up ahead of their product launches. And lastly, plants have entered into a partnership with the Indian act player, UPL, to develop and commercialize microbial crop protection solutions. Another highlight during Q1 was related to Bacthera, our joint venture with Lonza. Please turn to Slide 5. In November, Bacthera signed a commercial manufacturing agreement with Seres Therapeutics. It's an important milestone and therefore, allow me to say a few words about the agreement. After we have successfully established our setup in H\u00f8rsholm and Basel to service customers in the clinical supply market, we are now accelerating investments into commercial manufacturing capabilities based on the long-term commitment from Seres Therapeutics, whose lead candidate, Seres 109, has the potential to become the first ever live biotherapeutic products in the market. As part of the agreement, we will build a new production site in Visp, Switzerland, which is expected to be inaugurated in 2024. Once the commercial supply market is materializing faster than we expected, we are seeing that the clinical supply market is developing slower due to delays in clinical trials and patient intake during the COVID pandemic. These developments will require additional funding into Bacthera, but we are very confident in our ability to establish a living player in the field which can count on our expertise and capabilities from both JV partners. With these words, let's turn to Slide 6 to dive a bit more into the sales performance during the first quarter. If we look at the top line performance across the sexment\u2026 the segments, growth was fully volume driven. Food cultures and enzymes delivered 7% organic growth in Q1, driven by volume and with solid growth in dairy and very strong growth in food and beverages. The contribution from Euro pricing was insignificant. Health and nutrition recovered after a very soft quarter, reaching 13% organic growth in Q1. Human health and HMO delivered very strong growth. As already mentioned, the inaudible was largely driven by human health while inaudible HMO was in line with expectations. That said, I'm very pleased that a large part of our fiscal year ' 22 orders for HMO is already inaudible through long-term contracts. If we look at our animal and plant health business, growth was solid and driven by plant health, we benefited from early orders while animal health faced a tough comparable from last year. Across our businesses, we are in close collaboration with our customers to implement price adjustments to reflect the current inflationary prof\u2026 pressures. The implementation is progressing as planned and we will start to see the impact here from the beginning of Q2. If we look at the regional picture, please turn to next slide, uh, Slide 7, growth was largely driven by developed markets. Europe, Middle East and Africa delivered 10% organic growth, supported by good execution of the sales pipeline in food cultures and enzymes, and our recovering of the traditional dietary supplement channel in Europe. North America, uh, grew strongly, with 12%. Growth in health and nutrition was positively impact by order timing as Q4 was very soft. I already mentioned launches in HMO while FC&E continued to benefit from continued solid momentum in the cheese market. Latin America reported 8% organic grown, of which approximately 1 / 3 came from Euro pricing. Food cultures and enzymes grew solidly despite continued soft fermented milk markets, and health and nutrition was driven by very strong inaudible plant health. Lastly, in Asia Pacific, after a soft year-end, will return to growth, driven by food cultures and enzymes, that saw a positive growth in China. The fermented milk market in China though is still not developing favorably, and our outlook for China is still to be flat to slightly positive in fiscal year ' 22, driven by the low comparable from last year and specific customer projects. Health and nutrition was on par with last year. Both human health and animal health face a tough comparable baseline from last year. In total, these resulted in 4% organic growth for Asia Pacific. And with these comments, I would like to hand over to Lisa for the financial review. Thank you, Mauricio, and welcome also from my side. Uh, please turn to Slide 8. Looking at the development, um, profitability, the EBIT margin ended at 24.4% for Q1, down from 25.2% last year. The drop was in line with our guidance, driven by, first, the full inclusion of HMO, which was only partly reflected in last year's numbers as the acquisition closed mid-October. Secondly, the general ramp up of activities, including travel, and thirdly, higher input costs from the inflationary pressure, which we only expect to see recovered in sales price increases as we progress through Q2. This was in partly offset by positive contribution from production efficiencies and scalability from the sales growth, combined with synergies from our probiotics acquisitions. If we exclude the impact, uh, from HMO, then the EBIT margin would have been above last year by approximately half of the inaudible. Total EBIT before special amo\u2026 items amounted to EUR 65 million, which is 7% up compared to last year, driven by food cultures and enzymes, while EBIT in health and nutrition was at the same level as in Q1 of last year due to the negative impact from HMO. If we look at the segments, food cultures and enzymes EBIT margin before special items was 30.8% and on par with last year, with production efficiencies and scalability effects from volume growth being offset by higher input costs not yet reflected in the sales prices, and a general ramp up of activities. Health and nutrition's EBIT margin before special items was 11.9%, which is 1.7 percentage points below last year, driven by HMO. Excluding HMO, our health and nutrition EBIT margin would have been above last year. The profitability improvements were driven by scalability effects and acquisition synergies that were partly offset by higher input costs and the general ramp up of activities. Let's look at the cash flow on the next slide, Slide 9. The free cash flow before acquisitions and special items came in at EUR 55 million compared to a negative of EUR 7 million in Q1 of last year. The increase was due to both an improved cash flow from operating activities and lower operations investments. The increase in the operating cash flow as driven by improved operating profit and a positive impact from working capital compared to Q1 of last year. And cash flow use for operational investing activities was EUR 18 million, down from EUR 52 million in FY ' 21. The decrease in spending was driven by the acquisition of the cannonball facilities last year. The return on invested capital, excluding goodwill, was 20.0% compared to 20.6% last year, and the decrease was driven by health and nutrition due to the inclusion of HMO while the return on invested capital in food cultures and enzymes was on par with Q1 from last year. And with these remarks, let's move to next slide, Slide 10, to recap our guidance for the year. Following the encouraging first quarter, we keep the outlook for the year. Group organic growth is expected to be in the range of 5% to 8% and will inaudible volume driven but with some positive impact from pricing to reflect the inflationary development. Food cultures and enzymes is expected to deliver solid mid-single digits organic growth throughout the year and despite an insignificant contributions from Euro based pricing. Organic growth in health and nutrition is still expected to be volatile across the quarters but is now expected to be more front-end loaded than earlier estimated. As already mentioned, plant health ben- plant health benefited from early orders in the first quarter, which will negatively affect Q2. For HMO, as Q1 benefited from customers ramping up for the U.S. launches, the growth momentum will be lower, the rest of the year though still in a range above 20%. And for human health, our ability to serve customers has resulted in some extraordinary wins in Q1 and we also see good momentum going into Q2. When it comes to EBIT margin before special items, this is still expected to be around the same level as last year, between 27% and 28%, as cost synergies from the probiotics acquisitions, production efficiencies and a small positive impact from the U.S. dollar exchange rate will be offset by continued ramp up of activities, investments into HMO business and the inflationary pressure on certain input costs. The latter we expect to largely recover during the course of the year as price adjustments become effective. The free cash flow before special items is expected to be around EUR 140 million to EUR 170 million as improved operating profit is expected to be more than offset by significant increases in taxes paid as FY ' 21 was positively impacted by acquisition-related one-offs. The free cash flow outlook assumes a CapEx in line with FY ' 21. As you remember, we updated our long-term financial ambitions last quarter\u2026 We updated our long-term financial ambition last quarter to reflect the divestment of natural colors and the acquisition of Genui. And I would like to emphasize once more, that Christian Hansen remained committed to delivering industry-leading profitable growth under strong cash flow with focus on spending discipline and capital efficiency. Until FY25 we aim to deliver mid to high single-digit organic growth average over the period. An increase in epic margin before special items over the period to above 30%, and average growth in free cash flow before special items to grow faster than eBid before special items. And with this, I would like to hand back over to Mauricio to present our new climate target. Thank you, Lisa. I'm very happy to present Christian Hansen's new carbon reduction targets that were published in November, 2021. Following the validation by the Science Based Target initiative. Please turn to slide 11. Christian Hansen's microbial solutions enable healthier living for humans, animals, and plants, leaving a positive hand print in society and our planet. At the same time, we are committing to reducing our footprint. Taking climate action that is rooted in the lesser scientific census is a natural next step for Christian Hansen. By 2030, Christian Hansen aims to reduce its scope into emissions by 42%, and its scope free emissions by 20%. To reach these ambitions goals, we have launched a new program called Think Climate Naturally. Under which we will pursue a number of initiatives, including converting local, uh, electricity supply to renewables, reaching a 100% recyclability of our key packaging materials and 100% circular management of our bio waste, working smarter with heat supply, and switching to refrigerants with limited climate impact. Engaging with suppliers to address low carbon practices and renewable energy, and by minimizing air freight and moving to sea freight and pursuing partnerships on low carbon fuels. Some of these initiatives are already paying off not only on our footprint, but also on our cost. Converting to renewable energy sources like solar panels here in Denmark, for example, has kept a negative impact from the\u2026 in energy prices down. And with this, let me wrap up this presentation and summarize. That Christian Hansen delivered an encouraging start to the fiscal year 22 and will keep our outlook unchanged. 21 / 22 is a year of execution for Christian Hansen and will remain focused on advancing our 2025 strategic agenda. Driving commercialization of new innovations and delivering synergies from our recent acquisitions while mitigating any potential disruptions from supply chain constraints and implementing price adjustments in close collaborations with customers to offset inflationary pressures. Times continue to be uncertain with high volatility from COVID-19, increased focus from customers on business continuity and cost savings, potentially new travel restrictions which could impact our ability to advance our commercial pipeline and low visibility to end market demand. But I am optimistic that as a company, Christian Hansen is well positioned to deal with these challenges. Thanks to our robust and resilient business model. Thank you for the\u2026 For your attention, and with this, I would like to hand over to the Q and A. Thank you. If you have a question for the speakers, please press zero, one on your telephone keypads now to enter the queue. Once your name is announced, you can ask your question. If you find your question has been answered before it's yours turn to speak, you can dial zero two to cancel. Uh, in the interest of fairness and time, please limit yourselves two questions per turn. You can then rejoin the queue to ask further questions if you need to. Please hold for the first question. And our first question comes from the line of Soren Samsoe of SEB. Please go ahead, your line is open. Yes. Good morning, everyone. Uh, two questions first regarding, uh, the input cost. If you could say, what is the negative impact, uh, of input cost in Q1 versus last year. And then secondly, if you can comment on the price increases. You're seeing the level of price increases, which you'd expect, um, and, uh, what will be the effect of that, uh, down on the eBid, will that all be absorbed by, you can say by input cost increases? Uh, how do you see it? Thank you. Thank you Soren, and, um, good, um, good morning. Um, I will pass some of the\u2026 Just recapping your question is about the input cost, our process for price increases. And, um, I would you say we, uh, have a very strong methodology overall to reflect, uh, price increases, um, uh, with customers, and we expect to, uh, fully pass on the inflationary price increases, uh, to customers. So we have no margin dilution. Uh, I will pass it on to Lisa to comment on, you know, your specific question about, uh, our input, uh, costs. Well, so on in, input cost and the inflationary pressure is so obviously something, uh, that is unprecedented and that we are observing very closely. Uh, we have seen a higher cost and it's also, uh, impacted our results for Q1. Uh, we do not wish at this point in time to be very specific on it, uh, but it is, uh, it is part of the, you know, uh, the view that we look at, uh, landing the 24.4%, uh- uh, for- for Q1. And it's also important to say that, uh, we are actually very happy to see that if we exclude HMO, we have been able to offset, uh, inflationary pressure and other, uh, cost coming from the higher activity level, uh, through our, uh, productivity and- and scalability efforts. Okay. Thank you. Thank you. And our next question comes from the line of Las Toppan of Carnegie. Please go ahead, your line is open. Yes. Hello. Congrats with the, a very strong quarter, uh- uh, quite impressive and good to see a couple of questions on- on- on- on my side, so, uh, looking at your unchanged full year guidance, you need to grow 4 to 7% for the rest of the year. And given you probably get one 1 to 2% from pricing, that means organic growth will only have to be of- of\u2026 The volume growth will only have to be 2 to 6%. So- so I just wonder when you don't lift the lower end of your guidance range, is there any specifics we simply can't see? Or is it more function of you, uh, preferring to be conservative in a, in a scenario where- where visibility might not be so big. And then I have a question on HMOs because, uh, Abbott has launched their five HMO, uh, similar product. Uh, which you supply as upload cost that's the- the- the-the big thing for- for your HMO business in the quarter. Uh, first of all, I would like to understand when you sell to a product that contains 2'FL and then instead sell to a product that contain all five HMOs, eh, how much does your\u2026 Uh, what do you say, you- your revenue proportion, uh, increase? Is it five times up or is 2'FL still the main revenue contributor? And then I wonder what this implies for, uh, the HMO revenue in the quarter. You mentioned lighthouses are 10% of sales. Uh, if we assume bioprotectants and plant health is- is, uh, sorry, uh, plant health is 10% of- of food process and enzymes. That means, uh, p- p- plant health and HMO has to be 10% of, uh, health and nutrition. Uh, I just wonder how that is split between plant and- and HMOs. Thank you. Good morning, uh, Lash. Thanks for your, uh, positive comments on the encouraging start of the year. So- so two questions you had on guidance and on HMO. Uh, let me try to provide some, uh, light into those. So- so for sure, an encouraging start of the year with good momentum across our two business areas. And as I stated in the call, we also see good momentum going into Q2. But, uh, but you are right, it's still a very volatile environment, so I think, uh, we're only, uh- uh, let's say three months into the year of, uh, 12 months. And I think it's good to recognize that while we are in a good position in Q1, we maintain our guidance, uh- uh, for the, uh, for the year and- and- and that is the position. Yes, you know, pricing, um, uh, we expect the, uh, uh, the, uh, growth to be mainly volume driven, pricing will contribute, uh, you know, north of the, uh, uh, 1.5% or around the 2% that you mentioned, but we, um, uh, expect to continue to see a good, uh, performance of our business and hope that provides some, uh, visibility into, um, into our, uh, current, uh, guidance. Now on, um, on HMO, so, um, uh, HMO, the HMO mix tries to reflect more the physiological level of the five, uh, different HMOs. So, um, uh, you know, without getting\u2026 Going into confidentiality or distortion, we expect the different HMO mixes for different customers may have a slight different component. Uh, uh, 2'FL is- is the largest component of the, uh, of the mixes, but we see good presence of the other, um, uh, uh, HMO ingredients, uh, there. And- and- and talking about the, um, about the lighthouses, uh, you know, all of them contributed to these strong performance of 35% in- in, uh, Q1, but obviously as we mentioned, uh- uh, particularly plant health and HMO benefited from all the timing in Q1. Yeah. That- that- that I understand Maurice but my- my- my question is if, uh, plant health and HMO is 10% of health and nutrition turnover, that is 9 million euros combined. If it's 50, 50, then, uh, HMOs contributed 4.5 million euros and you have a big product launch from -from Abbott. So- so given that, uh, in Q2 and Q4 last year, uh, HMOs were 6 and 7 million in revenue respectively, I just wonder if sort of the underlying run rate for HMOs was in fact weak, given that, uh, you- you- you have this big, uh, product launch fro- from Abbott. I'm just trying to- So a couple-\u2026 to understand the- the numbers. So a couple of comments, I think- I think your calculation of HMO is, um, uh, not 100% correct. HMO was- was more than that, but also consider that while we had the launch of, um, HMO in the US, Abbot has not yet done a- a national launch. Is it was launched online and it was, let's say what would be called a prelaunch. So, um, we- we do not consider the, um, you know, HMO performance to be, uh, below expectation, is on target and we are confident to deliver the above 20% growth, uh, for the year based. Uh, most of those orders being secured by our long term contracts. That's very clear Maurice, so thank you very much. Thank you, Lash. Thank you. Our next question comes from the line of Christian Reim of Nodia markets. Please go ahead, your line is open. Hi, good morning and- and thank you for taking my questions. I have two as well. The first is- is the clarification on the HMO topic that we just touched on. Uh, can you, can you clarify whether, uh, in terms of absolute revenues, uh, Q1 here was your best quarter yet for HMO, uh, revenues. Uh, and then my second question goes to the, uh, sort of guidance for, uh, the health and nutrition business where's\u2026 Where I understand that you say that the growth will now be more front and loaded for the full year. Um, should we understand that to, uh, be a reflection of some pull forward, uh, of demand for, uh, the\u2026 For the following quarters, uh, or from the following for the next quarters. Or, uh, should we may earlier understand this as a- a reflection of a high growth rate in- in Q1 that will not necessarily repeat, uh, in subsequent quarters, but not, um, a matter of, uh, growth having been pulled forward. Thank you. Yes. So- so, um, first question on- on, uh, HMO, uh, um, I will pass them on to Lisa. I think it'll be important to clarify if you're talking sort of the absolute in absolute Terence being the largest quarter in invoicing that we, uh, have had. And- and then to, um, health and nutrition, I will take that on. So, you know, health nutrition had a- a strong start of the year, uh, 13%, uh, stronger than we expected. Uh, basically driven by the, uh, good momentum, reopening of the traditional sales channel in North America and Europe. And also by our ability to, um, uh, win new project based on the good, uh, execution of our supply chain. As I said, we go into Q2 with a good momentum in health and nutrition. And that's why we said that the, um, you know, growth will be front and loaded because we expect a solid, uh, first half of the year for health and nutrition. Um, while some people think there are low comparables in the second half of the year, I would just remind everyone that the low comparables in the second half of the year was for our. The non comparables in the second half of the year was for our inaudible business but that our acquired business, that were not part of organic growth in H2 had a very strong performance so the comparables are not as easy as people might, might think. Lisa onto you for the, uh, question of uh, HMO. Yes. Um. And let's, let's be clear. We, we, we, we would like to avoid to give you absolute numbers on the revenue from, from HMO. What, what we can confirm is that uh, the ambition for this year is at 20% plus organic growth on, on the baseline from last year. And yes, we do- we did see some impact, some positive order timing in, in, in Q1. Okay, but, but you cannot say, whether say Q1 was better than Q4 in terms of revenue for the HMO business? No. Okay. Thank you. inaudible next question comes from the line of Georgina Frazer at Goldman Sachs. Please go ahead, your line is open. Um, thank you for taking my questions. Morning. Um, so my first question is um, if you are able to quantify to any extent just how much of the organic growth in human health was front end loaded in the first quarter? Think it can be quite helpful to have that kind of aggregate number. Um, and then my second question is, um, I noticed that you have reduced your market expectations for human health over the course of 2020 to 2025 on the back of lower infant formula outlook. Can you explain why that assumption has not changed your expectations for the total addressable market for HMO's? Thanks. Hi Georgina. Good, good morning. Um, I will take the first part of your question in relation to what part of the uh, growth on health and nutrition was sort of underlying growth vs um, a one off and then I'll pass it on to Lisa in relation to the, uh infant formula, uh in market potential. So you know most of our growth in, in human health as I said came from the strengthening of the momentum. Uh, given the, uh, uh positive development we saw in the traditional sales channel in North America, in Europe, as well as the new wins. So you know, order of magnitude less than uh, uh, one third of the health and nutrition growth would be related to one off benefits. Um, um, related to Q4 orders that we were able to fulfill in Q1 or, or other non repeatable. And most of the growth came from this momentum that we have seen in Q1, and we see maintained going into Q2. Uh, Lisa. Yeah, um. You know, when, when we think about HMO, I think it is important to, to, uh, to recognize that the penetration is very, very low. Uh, this is a business and, and the market that only growing and emerging now as we speak. Uh, and, and we do still believe that as this is, you know, uh, the secret ingredient that the IF players are definitely looking into with high, high interest. It will be, uh, the ingredient that creates the premium product. We still believe in, in the full potential. But it is, you know coming from a very low penetration. Okay, that was really helpful. Thank you. And that is for inaudible Georgina with what we have said both for HMO and probiotics. That obviously, you know, a better momentum in, in infant formula growth will always be positive but let's say the, um, our business plans are based on the penetration of probiotics and HMO into the existing volumes of infant formula. Great, thank you both. Thank you. Our next question comes from the line of Heidi of Exane BNP Paribas. Please go ahead, your line is open. Good morning. Um, so I have got a few questions. Um, we see that milk and animal production is slowing relative to last year and bird flu is emerging. Is this a concern at all in either segments? What are your expectations? Um, and then secondly, we saw that, um pricing was negative in health and nutrition. Could you explain why that was and um, will that, uh improve you know as you lift pricing in the coming quarters? Thanks. Hi, good, good morning. So I'll take the first one on animal health and then pass it to Lisa on the pricing for health and nutrition that was more related to uh, to a one off, uh, situation that she cane explain. But good, good questions. Thank you for that. So you know we have seen pretty strong development in dairy farming. So we have not seen that impact our business in cattle, and particularly in dairy farming for animal has been strong and I think it is driven basically by, uh, uh the innovation and the products we have put out. Particularly you know, uh, uh, in, in, in our probiotics solutions. I, I think on Asian swine fever there you're right. You know animal, um, animal health had a very strong quarter in the Q1 last year as the population of swine in China was, you know growing again under better health conditions where our probiotics have played a role. And, and now face a larger comparable to that with uh, uh definitely an effect of the um, African swine fever. Um, Lisa on to you on the pricing question on health and nutrition. Yes, Heidi, it is related to the agreement we have on plant health with our, with our partner FMC. Uh, it's just a consequence out of the regular kind of settlements that we make with them. Um, an agreement, um in regards to how we recognize the revenues. So it's a one off, uh, for this quarter. So I would definitely not read that, not read from that, uh, anything in relation to our pricing ability or pricing pass through for our business, uh, as Lisa said, it is more related to a one off in connection to the uh, settlements in plant health with FMC. Just, just, just on my first question um, also we see milk production is slowing. Um, you know, cheese has been very strong for you in recent quarters. Um, could that have an impact in FCNE or um is that not a concern for this year? We don't view that as a concern for this year Heidi, but we closely monitor, um you know, the trends, uh, uh, uh in dairy development both for cheese and for the fermented segment. Thank you. Thank you. Our next question comes from the line of Alex Sloan at Barclays. Please go ahead, your line is open. Yeah, hi, good morning all. Congrats on the solid start, and two, two questions from me. The first one just on, uh pricing of the input cost inflation. I guess given the, you know, the small cost uh, percentage and strategic nature of your ingredients, it wouldn't be uh, you know too much trouble price increases with customers. But on the other side, I wonder you know what is your base case expectations in terms of your customers pricing action to offset inflation and could that uh, have any drag on FCNE and market volume growth, um for this year. Are you, are you expecting any pockets of slowdown due to this, in- inflation at all? Um, and the second question, just going back to HMO's and the five HMO uh, mix. I wonder I mean it's obviously early days but if you could give, uh, any color on how that product is actually performing on shelf in, in the US where it has been launched. Um, and more broadly on HMO's, are there any regulatory milestones that we might expect globally uh, this year um, that we should be looking out for? And any prospect of that five HMO mix, you know being launched in further new markets uh, over the next 12 months? Thanks. Thank you um, thank you Alex for your um, your questions. I'll, I'll take those two myself. So you know on, on your question around pricing. Uh, yes we have a very strong pricing methodology and in close collaboration with our customers uh, all, all I would say is like, uh, the pricing negotiations are advancing as planned and on target and we track those to you know conclusion of the negotiations, and uh completion of the uh, uh price increases and that is tracking on plan and, and on target. Uh, you know I don't want to mislead you. I mean pricing negotiations with customers are never easy but I think we have uh, a very good positive collaboration with customers on the understanding of the input cost and how then price led into uh, into price increases. But uh, uh, pleased, very pleased on how our organization is managing that and confident that we will deliver on the price increase targets that we have internally. On HMO, indeed too early, too early to tell on sell through. I- probably, um, um, you follow that market very closely. You'll be able to get a better read from the reports from our customers. I think what we are very pleased from the um, five HMO mix is that everything that we expected on this being a front panel ingredient and positioned as the um, let's say important ingredient to make infant formula closer to mother's milk, that has been uh, uh very clearly communicated in the product launches which I think is positive for the HMO market uh, uh, overall. On regulatory, I think the bigger, the biggest next step would be the regulatory approval of HMO's in China. Um, we are working on that but as we have faded we expect that to take place in 2023- 2024. Thank you. Thank you. Our next question comes from the line of Mathias of Handelsbanken. Please go ahead, your line is open. Good morning. Uh, two questions please. Uh, so first coming back to the uh, dynamics in the global probiotic supplement market which benefited from the rebound which you mentioned. So obviously consultants expected 2% organic growth for health and nutrition. In the quarter you come up strong as thought, 10%. You talk about volatility to remain but you also said, if I heard you correct that momentum from human health into Q2 remains strong. So, so what of this ability do you have and maybe help me frame what volatility here means. For example, can we rule out another negative quarter as we saw in Q4 last year? You have to put volatility into perspective. And then secondly, if you can shed some light of historical growth rate for the lighthouses you have to put a 35% growth rate into context. You talked about that not being representative for the full year but inaudible seen as a specific number for this. So maybe help me understand how strong that number is. Thank you. Absolutely, thank you Mathias. So um, you know health and nutrition uh, indeed we had, we had a strong quarter. We see good momentum going into the second quarter. But when we talk about volatility it's usually because it's a more concentrated business and the way that orders fall into one quarter or another can sometimes make a quarter you know stronger or weaker. I would not, I would not mention specifically could you, you know see a negative quarter. I think the benefit that we have now, that the acquisitions are integrated into our organic growth. If we definitely have a much better balance in our total portfolio of um, you know end markets um, portfolio strengths, end channels but you would still see uh, more volatility in health and nutrition as compared to food cultures uh, en- enzymes. Maybe, maybe adding to it. Uh, uh, it's also important again to highlight that the very strong situation we were able to deliver on supply in Q1 uh, was also part of the success formula so to say of human health. And when we look back at it in Q4 one of the things we were caught by was a raw material shortage so that we actually kind of left the business on the table that we couldn't execute on. And that's a part of our upside now. So we do have a dependency on our ability to supply. During COVID in general we have been quite successful. But also we are not immune uh, in the world we are operating in. And I think that's also talking a little bit to the uncertainty, uh, that we are looking into for the rest of the year but we are not having any concrete pointers. It's just that this is in the environment we are operating in. Just remind me uh, uh, Mathias was there a second part to your question that we haven't addressed? Uh, sorry. Yeah, yeah, well maybe you have to put the 35% growth rate for the lighthouse- Yeah, yeah. Oh the lighthouse question. So you know what we have always shared is that the lighthouses um, have a potential to reach in a 100 million and when will grow faster than the core business. So, that you know, if if you got to make, if you want to make an assumption on the lighthouses. I always talk about the lighthouses being double digit growth rate initiatives for us. And if you see um, you know for example bio protection. Bio protection is something that has consistently been growing above 10%. Um, I don't know that I would go and you know qualify a specific quarter on um, um, on the lighthouses. Because these are very, still very small businesses. So uh, you know percentage on a quarterly basis can be um, can be misleading. But we are, you know focused on delivering double digit growth for our lighthouses year over year. That's very clear. Thank you. Thank you our next question comes from the line of inaudible of Bank of America. Please go ahead your line is open. Yeah, morning everyone. Thanks for my question. So just a clarification on, on my side if you can. You, you've mentioned benefits from timing of orders in, in. if you can. Now, you- you've mentioned benefits from timing of orders in, in plant health and product launches in HMOs. So if you can clarify if there is any unwind here to be expected in Q2 or if it was just no repeatable benefits in Q1? So plant health and HMOs, as I understand, human health is, is just a one-time benefit there. Uh, and Lisa if you can give us an indication on the performance of bioprotection in the quarter, it would be great. Thanks. I will, uh, take the one on, uh, on bioprotection and, uh, pass it on to, um, uh, Lisa to comment on the one-offs, uh, uh, timing of orders. Um, so, so bioprotection grew around 15% in, in the first quarter, uh, which is, uh, which is only, uh, I would, uh, remind you that even though we launched in spring the, uh, Generation Tree, we are working in projects with customers and we should not expect a larger contribution for the first generation, for the third generation of bioprotection before our second half, uh, of the year. Yes. And, and, and building on your first question, Miru, um, you know, if we look at what was the one-offs in, in, uh, in, in, in human health in Q1 that will impact the rest of the year, as we said. Plant health was definitely, uh, a one-off in Q1, uh, and we expect to see, uh, a negative side of that in Q2. For HMO, uh, there was some order timing benefiting in Q1 which will just level out over the year, but ending the full year the, the 20 plus percent, uh, that we talked to. Uh, and apart from that, I would say from, from the rest of the rebound of human he- of human health, uh, it was a lot of, uh, new business, uh, opportunities that, uh, materialized and where we don't, uh, anticipate, uh, the negative side of it, uh, the rest of the year. Understood, thanks. And, and just following up on this. So on, on the plant health, I- I think you mentioned overall, the one-offs were one third of the performance in, uh, in, uh, health and nutrition. How much of that one third was the one-off in plant, in plant health? Uh, it's, it's not big, it- it's, it's not big. And then I also think, when you think about one-offs, also think about into that, we also include the benefit we have from, from Q- Q4, uh, right? So, um, it's not, uh, the largest, plant health. Oh, okay. Thank you. Thank you. Our next question comes from the line of Charles Eden at UBS. Please go ahead, your line is open. Hi, good, good morning, uh, Misha and good morning, Lisa. Uh, two questions for me, please. Firstly, can you quantify the China growth you saw, um, in SCNE in Q1? And, and maybe if you can remind us the comparison or just sort of a range, um, of the decline in, in the prior year quarter? And then, my second question is just a clarification to response on one of the earlier questions on pricing inaudible I think you said there would be no margin impact from the pricing. I just wanted to check I heard that right, um, because does your pricing model protect the gross profit or the gross profit margin? And I thought it was the former, but maybe I'm incorrect, so I just wanted to clarify. Thank you. Thank you, Charles, for the, um, uh, for the group, uh, questions. So on, um, on China, China had a, had a solid growth against, uh, uh, uh, low comparable, uh, from, from last year. I, uh\u2026 And, and, and that was mainly because, you know, uh, Q1 of last year for SCNE was particularly, uh, soft. So, so, um, uh, I- I- I wouldn't read, um, much more into that from China, but I do believe, uh, uh, our feeling is consistent with what we communicated in Q4, saying that, um, we expect China to be, uh, you know, flat to slightly positive for us for the year, despite the continued, uh, uh, negative development of the fermented category in, um, in China. Um, I will, I will pass it on to Lisa to comment on, on margin, but just to clarify my comment, I said when we passed, uh, prices with inaudible p- price, uh, uh, uh, passed on prices to make sure that we protect our profitability. So if, if, if we think about the pricing impact and, and looking at our financials for this year, I think it's important to also call out that our price increases does come with some delay. The ambition is that, uh, we can increase the prices to offset, uh, not only just the cost but also, uh, the margin impact, but it will come with some delay this year. And what do we base this on? We base this on that this is what we have usually done, and we are in a very good collaboration with the customers on it. Okay, thank you. And maybe I can just follow up quickly. So do you think, are you able to say when you think your pricing will be in a position, given where inaudible are today, to fully offset the headwind? Are you, are you able to give that detail? Well, it, it of course depends on whether we know the full magnitude of the headwinds at this point in time. It is very unprecedented times. Um, so I- I- I think, you know, uh, the overall conclusion is that what we're doing here is back into our EBIT guidance for the year, uh, which is, uh, a landing corridor between 27 and 28%. Um. And we see around the quarter delay between, you know, our, uh, uh, inflation cost input and our negotiations with customers. Yeah, that's crosstalk- I think under more normal conditions, we would usually have, uh, uh, one round of negotiation with customers. As inflation development continues to be more, um, uh, fluid at this year, we may have several negotiations of pricing, uh, with customers. Understood. Thank you very much. Thank you. Our next question comes from the line of Andre Tauman of Danske Bank. Please go ahead, your line is open. Yeah, hello, uh, both of you and thanks a lot for taking my question. Uh, first of all, um, uh, in terms of this good momentum, uh, you mentioned in human health, uh, I wonder if you could elaborate a bit on th- this momentum, and also on whether this is driven by, uh, the A- UAS, uh, combination, uh, that has happened? And, uh, and my second question is in terms of inaudible and enzymes, and the strong, uh, performance that, that you have seen, whether there is some kind of, uh, reopening, uh, effect, uh, that has affected these, uh, numbers, uh, positively? That's my questions, thanks a lot. Yes. Uh, so, um, let, let me start with the, uh, with human health. Uh, Andre, not, not much more that I can add to what we said. I mean, the strong performance in human health was really driven by the reopening of the, uh, traditional sales, uh, channel in North America and Europe. Uh, we are benefiting from our strength inaudible solution, uh, uh, strategy and the broader portfolio that we have in, uh, human health, where we are now, uh, able to commercialize, uh, uh, across the combined units. Uh, inaudible legacy are highly documented probiotics, and the addition of the, uh, strength from both, um, HSO and, uh, UAS labs. So it's largely inaudible driven, but I would say a, a strong execution of our human health, uh, uh, inaudible. We also highlighted, and I will repeat that again, that we have a strong supply chain performance that enabled us to capture business and have new wind, while also fulfilling others that were\u2026 we were not able to fulfill in Q4. And, and that combination puts us also in a strong position with human health into, uh, the second quarter of inaudible. Um, in SCNE, um, uh, you know, the\u2026 it, it was mainly volume driven and, uh, uh, mainly volume driven and mainly in the inaudible market. So very strong performance of pros- of, uh, projects, uh, in Europe, where, by the way, we were able to be more present with customers, and, uh, the chief market in North America partly driven by, you know, uh, uh, a larger presence in, in food service as well, but where we see some chief types, like mozzarella, continue to perform very strongly. So maybe we have time for, uh, for one more question, uh, before we, uh, uh, inaudible Thank you. There is only one further question in the queue, that's from the line of, uh, Sarinon Samsa at SUB. Please go ahead, your line is open. Um, yes, uh, I just had, uh, one followup, uh, regarding the lighthouse projects, uh, where you can say you have earlier been quite concrete on the p- absolute potential of these while you now seemed a bit less concrete, uh, which I completely understand. But maybe you can comment a bit, there must have been some delays in delivering on these sort of, uh, overall ambitions you have had there and because of COVID. Maybe you can elaborate a little bit more on what we should experience in the long term. I- I- I of course acknowledge that this is quite uncertain and difficult to predict, but maybe give, um, s- uh, s- your thoughts there. And then secondly, on animal health, uh, which I understand was quite weak in Q1 actually, I can't remember whether that's because of some particular high comparables or, or the timing, but just comment whe- what, what's the momentum in animal health in the underlying business going into Q2? Thank you. So Sarinon, on, uh, animal health, animal health basically saved a, uh, difficult comparable, and the only thing, uh, that we, uh, I mentioned as well was that in swine particularly, uh, we had a high comparable from Q1 last year because of the strong momentum of rebuilding the, uh, swine, uh, um, uh, population in China versus now, a little bit of return of, uh, African swine fever. But I think you could expect a normal momentum from animal health, uh, um, you know, going into Q2. And, and we have seen a strong performance on animal health throughout the last, um, uh, uh, uh, couple of years. So I'm very pleased with the, um, you know, how the team has turned the innovation into market execution and commercialization. On, on the lighthouses, uh, uh, Sarinon, uh, in, in our capital market toady, we basically provided what we view as the potential of those, uh, lighthouses, and then left it open to what our inaudible uh, would be. And, and I think that is a much better way to, um, you know, present these that are really business development opportunities where we leverage microbial and fermentation technologies that we know very well into new commercial spaces. So, uh, it's business building, it's bus- business building from a very, uh, slow\u2026 low base and, and\u2026 but w- areas where we see a large opportunity and we're very excited about. So, you know, uh, I- I would repeat what I just said, that the best way to think about out lighthouses is businesses that will grow faster than our, uh, core business, and where we can expect, you know, double digit, uh, growth rates, uh, um, uh, year- year-on-year. For sure, you may have quarters that are higher or, or lower, but I hope that, you know, provides some, uh, some perspective, otherwise, you know, we'll be able to, um, uh, uh, elaborate on this, uh, further as we, uh, uh, talk going forward. Okay. Thank you for that. Thank you. So with that, uh, this concludes today, uh, conference call and Q&A session. Thank you for joining and, uh, we look forward to continue our dialogue during the or- upcoming virtual roadshows. Uh, thank you, all."
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-    "transcription": "Welcome to the Novozymes's Q4 conference call. Throughout the call, all participants will be in listen only mode, so there's no need to mute your own individual lines, and afterwards there'll be a question and answer session. Today I'm pleased to present Tobias Cornelius Bjorklund, head of investor relations. Please look in your meeting. Thank you operator and, uh, welcome everyone to Novozymes's full year 2021 conference call. Uh, my name is Tobias Bjorklund and I'm the head of investor relations here at Novozymes as mentioned. At this call, our CEO Ester Baiget and our CFO Lars Green will go through our performance in key events of 2021, as well as the outlook for 2022. Also present at this call are Tina Fan\u00f8, EVP agriculture and industrial bio solutions, Amy Byrick, EVP strategy and business transformation, Anders Lund, EVP consumer bio solutions, and also Claus Fuglsang, uh, CSO, EVP of research and development. The entire call will take about 50 minutes including time for questions at the end. Before we begin, I would like to remind you that the information presented during the call is unaudited and that management may make overlooking statements. These statements are based on current expectations and beliefs and involve risks and uncertainties that could cause actual results to defer materially from those described in any overlooking statement. With that, uh, I now leave the hand to, uh, CE- our CEO Ester Baiget. Ester please. Thank you Tobias and thank, excuse me, and thank you all for calling in. Please, uh, turn into slide, uh, number two. I'm very pleased with our performance in 2021, we delivered a strong sales earnings and non-financial numbers and advance our business in accordance with our a refreshed strategy, unlocking growth powered by biotech that we launched last September. Organic sales grew 6% and benefiting from our diversified portfolio. Performance was particularly strong in food, beverages and human health, in bio energy and in grain and tech processing, all three business areas delivered strong double digit growth. Household care declines likely and agricultural and animal health and nutrition was flat. And when both, uh, business areas were soft, they were roughly in line with our latest expectations for the full year. Over the past couple of years we have invested in our commercial activities, especially in emerging markets. And it's very, very encouraging to see the sales here growing by an impressive 18%. Sales in the developed markets also grew, although at a more moderate rate. Sustainability, it's part of our DNA here at Novozymes. And I'm very pleased to say that we are on track to meet 12 of our 30 non-financial targets. While the, the targets are for 2022, we actually exceeded several of them already in 2021. The benefits to the world from the use of our products are something we are all very proud of, and we embrace the responsibility to be at the forefront of the movement for a healthier planet, as a company with a strong purpose. We are committed to support the transition towards a climate natural society, and in 2021, 77% of our revenue was generated from products that contribute to lowering CO2 emissions by reducing the use of fossil based resources, and by reducing waste. Another key to achieve a more sustainable world, is to transform food systems. In 2021 35% of our revenue came from products enabling our food production systems to produce more food from less and improve nutrition and quality. Additionally, we strongly committed to enabling healthy lives, and 5% of our full year revenue came from products that enable a better health for people around the world. From an innovation perspective, 2021 was another strong year with the launch of market leading products, such as Pristine, which is the broad market freshener solution and prag 360, which improved digestibility of proteins for animals. In total, we launched 14 products during 2021, including six in the fourth quarter of alone. This is much in line with previous years. Turning, uh, to our financials, we delivered a strong EBT margin and ROIC including goodwill as well as a strong free cash flow. And while reinvesting significantly in commercial activities, making, uh, several acquisitions and increasingly experience the head ones from higher input costs towards the end of the year. Executing on our strategy has been our number one priority in 2021, after acquiring Micrim Labs and the Biota Technology asset in the first quarter, we took another important step to advance our bio health business in the fourth quarter with the acquisition of Synergy Life Science. Synergy is a leading developer and manufacturing for sport probiotics and natural vitamin in K27, and it will play a key role for us in expanding our opposition in human health and also in functional foods. Also in the fourth quarter, we enter into a very exciting collaboration with Saipem on enzymatic carbon capture and continue the construction of the new state of the art production for advanced protein solutions in Blair, Nebraska in the US. The steps we have taken during the last couple of years, sets us up to deliver another good year in 2022. And we expect to be off to a good start for the year. In 2022, we expect sales to grow by 3 to 7% organically. With growth across all business areas, sales in Danish kroner is expected to be around three percentage points higher. The EBIT margin is expected at a solid 25 to 26 despite significant pressure from higher input costs. And lastly, we expect ROIC including goodwill to end between 16 and 17% while the free cash flow before acquisitions is expected between 1.7 to 2.1 billion Danny Kroner, including a significant uptick in CapEx, mainly driven by the new production line in, in Blair. With that overview, let's now look at each of the five business areas in more detail. And, uh, starting with household care. Could you please turn, uh, to slide number three. Thank you. Household care decline org- uh, by 1% organically in 2021, the so full year performance came against a strong performance in 2020. Emerging markets performed well supported by investments to expand our commercial footprint and tailor solutions resulting in an increased enzymatic penetration. Our sales developed, in developed markets declined as European consumer, uh, demand was significantly lower than expected. Performers further worsened in the second half of the year, where also two mid-sized private label players went out of businesses. The freshness technology performed well and in line with expectations, it was made available across multiple countries in Europe and the broad market solution was successfully launched in the third quarter. Sales in the fourth quarter declined 3% organically, similar to the full year performance emerging markets performed well while Europe in particular, continue to decline, decline for the same reasons as mentioned, uh, for the full year. While the 1% decline in 2021 was not satisfactory, an average annual growth of a rate of 2% over the past two years is a meaningful step in the right direction. Looking ahead, we expect sales in household care to grow by two to 4% in 2022. Growth is expected to be driven by increased market penetration in emerging markets, by freshness, as well as in the non laundry areas of professional and medical cleaning and in dish wash. As mentioned, we launched the broad market version of freshness technology in 2021. This was a significant milestone and freshness is expected to increasingly contribute to growth as the year progress as well as in the years to come. Could you please turn into slide number four? Thank you. Our food beverages and human health businesses had an excellent year and the team has done a terrific job in executing on the strategic direction while also capitalizing on the supportive market conditions. Sales grew 14% organically in 2021, with all three main categories growing by double digits. Growth in food was mainly driven by market penetration, and demand was particularly strong for health focused solution, such as acrylamide reduction in baking, sugar reduction in dairy and solution for plant-based protein extraction. In addition, bene- baking benefited to some extent from raw optimization and ingredient substitution. Beverages perform well and outgrew the underlying market while also benefiting from a recovery in global beer volumes. Growth in human health was very strong and driven by cross-selling and geographical expansion. In the fourth quarter, sales grew 13% organically. The performance was led by food, bev- uh, by food. Beverages grew slightly and was, uh, somehow impacted by the stocking, where, uh, hum- whereas human health performed well and according to the expectations. Also, in the fourth quarter, we strength, uh, and accelerated our Bio Health business by acquiring a majority stake in Synergia Life Science and as I've already mentioned. Let me now turn, uh, to the outlook, in 2022, we expect organic sales in food beverages and human health to grow by high single digit rate, with all soup areas contributing to growth. Growth in food will be driven by market penetration, supported by health focused solutions and raw material optimization and ingredient substitution. For beverages, we expect, uh, growth on top of the double digit growth in 2021. And for human health, we expect continued solid double digit growth driven by innovation, cross-selling and regional expansion. Please turn into slide number five. Thank you. Full year sales in bio energy grew 11% organically. The strong performance was driven by the recovery of US ethanol production, growth from innovation, capacity expansion of corn based ethanol production in Latin America and market penetration with enzymatic solutions for bio diesel production, putting the US development a bit into context. It's important to remember that US gasoline demand and ethanol production was severely disrupted during 2020. US ethanol production rates gradually recovered during 2021, but still remain lower than the 2019 pre COVID level. Organic sales in the fourth quarter grew 10%, driven by the same factors as already mentioned for the full year performance. Additionally, sales benefit from growth market conditions for ethanol producers with some of the biggest crash margins in almost a decade. For 2022, we expect sales to grow by low to mill single digits. And as in 2021, growth continues to be driven by the recovery of US ethanol production, innovation capacity, expansion in Latin America, as well as market penetration in bio diesel. And as a final note, the past two years have been unusually volatile for the ethanol industry and uncertainties related to the pandemic and volatile market conditions are still present. This is also why bio energy com- covers a relatively broad range, uh, wine. Um, bro- broadly gro- growth range. Please, uh, turn into slide number six, thank you. Grain and non tech processing, uh, sales grew 13% organically in 2021. Sales in both grain and in tech grew by double digits with strong performance across soup areas. The growth in, the growth in grain was led by market penetration with solutions for vegetable oil processing, innovation in starch, particularly in grain milling as well as an increased and market demand for starch delivered products, especially in emerging markets. Tech grew primarily due to the recovering sales in textile following the negative COVID 19 impact in 2020. Good performance in areas such pulp and paper, leather and diagnostic enzymes for the pharmaceutical industry. They also contributed to the full year performance. Four quarter sales group by 15% organically. The performance was also broad base in the quarter with, uh, growth being fueled by innovation and high end market demand in starch delivered products. Market penetration in vegetable oil processing, uh, and sales of diagnostic enzymes for pharma. Looking at 2022, the, the development is expected to be more moderate compared to 2021, and thus we expect the sales performance to range from flat to low single digit growth. Growth will be led by continued market penetration in vegetable oil processing and from innovation in starch, such as for grain milling. Similar to the situation in bio energy, the relatively large uncertainty related to the pandemic and the volatile market conditions are affecting the way we see prospects for grain and tech processing, hence we have applied a relatively broad sales range for this business area as well. Could you please turn, uh, to slide number seven. Organic sales in agricultural and animal, uh, he- health and nutrition ended the year flat despite a negative, uh, base effect from 60,000,000 one off in the second quarter of 2020 related to the former biarch setup. Sales in animal health and nutrition grew primarily from increased market penetration, driven by inoventions, such balancials and Prag 360. Sales in agricultural decline into the afforded base effect and increase if adjusted to it. The adjusted performance was driven by market penetration led by Latin America. Four quarter sales grew 7% organically. Growth was the strongest in animal health and nutrition with increased demand for both protein and health solutions. Sales in agricultural also grew driven by higher demand for bio yield solutions. In 2022, we expect organic sales in agricultural, animal health in addition to grow in the high single digits to glow teams. Growth will be led by agricultural, which is expected to grow at double digit rate, good market conditions and beneficial substan- uh, sustainability pull is expected to benefit a higher usage of OncoLens. This combined with innovation and a refined go to market model will enable increased market penetration of both bio yield and bio control solutions. Animal health penetration sales are also expected to grow fueled mainly by innovation and market driven volume growth supported by favorable market conditions. And with that a land over to Lars for a review of the financials. Lars please. Thank you Esther. Let me start by reviewing the performance of our sustainability and non-financial targets. Please turn to slide number eight. With our refreshed strategy, unlocking growth powered by biotech, we made new long-term commitments to accelerate towards a climate neutral society, transform food systems and enable healthier lives. We also significantly raised the bar by including scope three emissions in addition to scope one and two in our CO2 sa-\u2026 emissions in addition to scope one and two in our CO2 savings target for 2030. The 2022 non-financial targets from 2019 are still valid and serve as milestones on our long term journey. And it's encouraging to see that we are on track to meet 12 out of the 13 targets we defined by in 2019. As the non-financial targets are coming to an end here in 2022, we are also committing to communicate the progress and milestones we have, we have towards our long term targets for 2030 and 2050. You'll hear more about this during the year. Now, please turn to slide number nine for a review of our financial performance. The performance in 2021 was highly satisfactory meeting or exceeding all targets, uh, set out at the beginning of the year. In addition, we successfully integrated two companies, acquired a third, and launched our strategy, unlocking growth powered by biotech. Sales grew 6% organically, and 7% in reported Danish kroner and included a 2% point contribution from M&A, and roughly a 1% point headwind from currencies. Sales in the fourth quarter grew 7% organically and 11% in Danish kroner. The cross margin was strong at 57.7%, 170 basis points higher than the cross margin in 2020. While many companies experienced the impact from higher input costs already in 2021, Novozymes's unique productivity improvements and production excellence, including our leverage, allows for some alleviation of such changes in input costs. However, we are not immune to the significantly higher input cost, and we started to see a growing impact in the fourth quarter when the gross margin came in at 56.1%. This was 60 basis points above the fourth quarter of 2020, but around 200 basis points lower than for the first nine months of 2021. We saw the same beneficial operational factors throughout the year, with the addition of a supportive prime mix, price mix, and M&A contribution. The first quarter year-on-year cross margin development was driven by the same factors as for the full year, with input costs becoming a stronger headwind in the quarter. The EBIT margin was solid at 26.8% in line with expectations, and 70 basis points higher than in 2020. Higher operating costs were more than offset by higher gross profits and an increase in other operating income. As implied by the 27% full year outlook, the fourth quarter EBIT margin was expected to be soft, and the year-on-year decline was primarily due to increased operating costs, which offset the improved cost margin. The first quarter increase in operating costs was as expected, mainly due to higher sales and distribution spend, one off transaction costs, and the recognition of acquisitions. Currencies provided a slight headwind for the full year, but were marginally supportive in the fourth quarter. When adjusting for one-offs, the underlying full year EBIT margin for 2021 was around 27%, and roughly on par with the underlying EBIT margin for 2020. Further, when comparing year-on-year margins, 2021 included close to a 1% point headwind from M&A and currencies compared to 2020. In the fourth quarter, the underlying EBIT margin, when adjusted for both the transaction costs related to the acquisition of Synergia Life Sciences and the sale of a non-core building in Switzerland, was around 22% compared to the 21% reported. Additionally, the fourth quarter included high operational costs as expected, and included in the outlook of around 27% for the full year. Net investments totaled 1.1 billion Danish kroner somewhat below expectations, mainly due to timing in the fourth quarter. Free cashflow before acquisitions was solid at 2.9 billion Danish kroner. Working capital changes and increased net investments offset higher net profit and improved earnings quality. The lower year-on-year cash flow was much as expected following the, the 2020 BioAg one off, and the previously highlighted timing effects that had a positive effect on working capital in 2020. The first quarter free cash was 200 million Danish kroner and roughly in line with expectations following higher networking capital, as well as higher investments. Return on investor capital, including Goodwill, was 19.3% in 2021. This was 40 basis points higher than in 2020. The improvement in ROIC was due to the higher net operating profit after tax, which more than offsets an increase in average invested capital following the three acquisitions. Please turn to slide 10 for the 2022 outlook. We continue to invest and position ourselves to unlock Novozymes's true sustainable long term growth potential. Organic sales are expected to grow by 3% to 7% in 2022, and sales in Danish kroner are expected to be around 3% points, including roughly 1% point from the acquisition of Synergia. The indicated ranges per business area are broader for the agricultural exposed areas, catering for higher implied in market volatility. The full year indications per business area are in line with the overall 2025 targets presented at our recent capital markets day. Seen over the year, we expect performance to be offered to a good start in 2022. The EBIT margin outlook for 2022 is between 25% to 26%, including an expectation of a slight year-on-year benefit from currencies. The margin will benefit from operational leverage, productivity improvements, as well as targeted price increases. This is expected to be more than offset by significantly higher input costs and continued investments in the business. Included in the outlook, the cross margin is assumed to decline by 1.5% to 2% points in 2022, compared to the previous year. We are making a dedicated effort to pass on higher input costs. And while we expect this to have a net neutral impact on our year-on-year sales growth, the effort is expected to be supportive to the cross margin, and it's included in the outlook. The free cashflow before acquisitions is expected at 1.7 to 2.1 billion Danish kroner, including a significant step up in net investments to support our growth opportunities. Net investments are expected at between 2.5 and 2.8 billion Danish kroner. The increase in net investments reflects maintenance, expansion, and optimization CapEx, as well as investments to support our ambitions in the food and health related areas. The amount we expect for net investments in 2022 includes roughly 1 billion kroner related to the advanced specialty protein facility in Blair. When adjusting for the protein investment, net assessments add up to around 10% CapEx to sales ratio, which is in line with what we communicated at our capital markets day. The outlook for the return on investor capital, including Goodwill, is for 16% to 17%. Subject to approval at the annual shareholders meeting in March, the dividend is proposed at 5 1 / 2 Danish kroner per share up by 5% from the year before, and corresponding to a payout ratio of 48.5%. In addition, a share buyback program of up to 500 million Danish kroner has been approved for 2022. This is in line with our capital structure policy to return the free cash flow generated to shareholders through a combination of dividends and share buybacks at a net debt to IBITDA ratio of around 1. With this, I'll now hand back to Ester for a wrap up, before we open up for questions. Ester, please? Thank you. Thank you, Lars. Please, uh, turn to slide number 11. Thank you. I'm very pleased, uh, with the strong set of both financial and non-financial results that we have delivered in 2021. We grew our sales 6% organically, with double digit growth in three of five business areas. We delivered solid earnings and cash while still reinvesting significantly in the business. And we are on track to meet 12 out of the 13 of our non-financial targets. We expect the strong performance from 2021 to continue in 2022. And we are guiding for a 3% to 7% organic sales growth with a solid EBIT margin that comes despite high input costs. Both ROIC and cash are impacted by high investments to secure growth of the business. Our relatively broad range, uh, for sales growth allows us to navigate through continued uncertainty related to the pandemic and volatile market conditions, similar to the way we position our outlook for 2021. At the beginning of 2021, we outlined four progress areas to allow you to follow our strategic execution from a different angle. One of them was to engage in at least three large commercial R&D collaboration. This goal was achieved with a collaboration with Saipem, with a key, a key player in the plant, uh, based industry, and with FMC in agricultural. The second progress area focused on commercializing innovation. This goal was also accomplished as more than 30% of our sales were from solutions launched during the last five years. Thirdly, we wanted to reach more customers and aim to generate at least 50% of our sales leads digitally. This goal was achieved as more than 60% of our new leads were generated digitally. And finally, we want to be a strong voice on the world stage for the ever increasing need of sustainable solutions. We wanted to take part in at least three global events linked to sustainability, and by participating at the World Economic Forum, the UN Global Compact Leaders, and the COP26 in Glasgow, we also reached our target for this key progress area. Executing on our strategy remains a top priority here in 2022. And pre key progress areas for us are achieving key milestones in the construction of the new production line for advanced protein solutions in Blair, Nebraska, leverage the rest and acquisitions and deliver double digit growth in human health. Continue to strengthen our commercial setup also by initiating investments in the first customer co-creation center. And finally, we will secure that we keep diligent focus on prioritizing in our core business, making sure we deliver on our short, as long as our long-term commitments. Novozymes is in a unique position to drive change towards a healthier planet. And as a company, we have a responsibility to make this happen. We have built an even stronger foundation over the past two years. And with our 60 year legacy in understanding biotechnology, we are committing to grow our business sustainably, making a lasting difference to the world and to all our stakeholders. And with this world, these words <unk> please, uh, let's now begin the Q&A session. Operator, please begin. Thank you. If you wish to ask question, please dial 01 on your telephone keypad now to enter the queue. Once your name has been announced, you can ask your question. If you find it's answered before its turn to speak, you can dial 02 to cancel. Our first question comes from the line of Gunder Sekmen of Bernstein. Please go ahead. Your line is open. Hi, good morning, uh, everyone. A few questions from my side. The first one is on a comment that you have in your release around the ROIC where you say that you expect NOPAT in 2022 to be lower, and that explains the lower ROIC guidance. Can I just confirm that, because if I take the midpoint of your organic growth guidance, put the Danish kroner guidance on top and an average margin, even at the higher tax rate of 22% in 2022, I get to about a flat NOPAT. So, uh, I'd like to understand why you have an assumption there that you have a lower NOPAT in 2022. Um, the second one, um, I was intrigued by your comments on pricing to pass on the higher raw material costs. Can you give us some, uh, guidance, what you've already seen in the field and what you're expecting to experie- see in 2022, because there's not usually, the enzyme market is not usually one where you see positive pricing. Um, so some commentary there would be very helpful. Um, and then lastly, one for Tina, if I can sneak that one in as well. You sound very bullish on BioAg, usually at the beginning of the year, you have a wide guidance range, uh, a wider guidance, guidance range in BioAg. What gives you the confidence, uh, for the strong growth that early in the year already in BioAg, please? Uh, thank you, Gunder, for these very good questions. I'll, I'll comment on pricing and then, uh, I'll pass it to Lars for the, uh, fu- uh, building on your co- comments on, on, uh, ROIC and then, uh, Tina on, on BioAg. So on, uh, on pricing, what gives us the confidence? I mean, it's not, uh, we have not started the journey on pricing, uh, today. This is a long journey that we have already been working, if you remember, uh, for, for, already since the, since the time, for sure, since I have been, uh, in the team, eh, and we start seeing the benefits of those focus last year, and this year we're doubling our en- energy in this segment. We live in extraordinary circumstances with a rapidly increasing raw material prices. As you seen, have you s- heard last saying, we did a fantastic job this year flowing and, uh, uh, postponing the impact of this, uh, high increased raw material till Q4, but we're not immune. And this opens a fantastic, uh, situation for environment for our discussions and conversations with our customers as contracts expire, as contracts sunset, to bring out the discussion of value on price on the table. And we aiming for a space where we are gonna move into a positive impact from pricing in gross margin, but then yes, uh, overcome, uh, by the higher raw material price increases. And then overall, uh, still with a, a slightly compaction of, of gross margin of 1.5% to 2%. And then I'll pass it to you, Lars. Yes. And thanks, Ester. And, uh, and, uh, Gunder, to your question on, on, on, on ROIC. Uh, clearly the biggest, uh, impact on the lower, uh, return on invested capital is coming from, from the invested capital component, uh, where the, uh, the acquired assets, uh, from our acquisitions is, is increasing, in- is increasing the, the invested capital, uh, number. So the, uh, the, the NOPAT, uh, is a smaller impact. Um, and of course our guidance, uh, is sort of a, a range on a number of parameters. Uh, and so therefore, um, our comments should be seen in, in that light. Um, I think the key point is that the biggest impact on ROIC is coming from invested capital. And then I'll answer on, uh, uh, the agriculture and animal health and nutrition comment on the BioAg specifically. So, um, yes, we do, uh, guide, uh, a relatively broad range here from high single digit growth to the low teens. And, um, if we, if we just take a step back in that area and in these Ag exposed areas, the growth drivers is both innovation, it's market penetration, it's sustainability. And then there's also support, uh, when the commodity prices are high, given that what we deliver is a\u2026 And, uh, the commodity prices are high. Given that what we deliver is a yield benefit and that has more value, in a high commodity, uh, market. Um, if you, if you look at the performance in, in 2021 in agriculture and animal health and nutrition, then you have to remember it, it was a flat performance, uh, you have to remember the 60 million which we saw in 2020, and also, um, we grew 7% in Q4, so we are on a strong trajectory and we also think there is some timing and that is supporting the high expectation for 2022. Next question, please. Thank you. That comes from the line of Michael Method at Nodia. Please go ahead. Your line is open. Yeah. Thanks a lot. Uh, just two questions. Uh, one to, uh, Greentech uh, maybe, Tina, you have, previously, talked about the, uh, impacts from in times to, uh, to COVID 19 testing. Maybe we could just details for us also how, how much of growth was impacted by this in Q4 in 2021 and how much is, uh, expected in 2022. Uh, and then secondly, to, to Lars, regarding, uh, CapEx. So is, should we assume that 2022 levels are the, the peak or would there be one more sort of, uh, significantly elevated and then sort of feeding off from, uh, from there? Thanks a lot. Tina, and, huh, Las. Yeah. So in, uh, Green and Tech, uh it's\u2026 if you look at the, yeah, both for the year and the quarter, then roughly 70% of the segment is coming from Green and 30% is coming from tech and that means that, uh, and within the tech segment, as you know, we have many different businesses, so diagnostics is a small part of, uh, uh, that, so it is a small impact. And on CapEx, uh, we, uh, guided, uh, in the capital markets day back in September for a CapEx to sales ratio of around, uh, 10%, uh, through, uh, the period to 2025. And then on top of that, we have our, uh, uh, advanced protein facility in, uh, in Blair. Now, uh, the latter is, uh, roughly 2 billion Corona in total, uh, over the three year period 21, uh, to 23. Um, and we, uh, recorded roughly 200 million in 21. Another 1 billion is expected here in 22 and so this leaves a residual, roughly 800 million for, for 2023. Um, the good thing is we have, uh, progress, uh, in line with our plans, uh, but, uh, exactly how, uh, the, uh, the, uh, recording of the CapEx plays out, of course, uh, is subject to a bit of uncertainty. So, uh, this is, uh, our expectations right now. Um, so you have to set\u2026 to add that the residual component of roughly 800 million, uh, to the 10% also in 2023. Sure. Understood. Thanks a lot. Thank you. Our next question comes from the line of Nicola Tang at Exane BNP Paribas. Please go ahead. Your line is open. Yeah. inaudible a few questions. It was a few on household care, actually. Um, I was wondering if you could talk a little bit about the reduced, um, demand in Europe and private label issues. I know we were talking about them back at Q3, but, um, can you confirm that the European issues are still sort of related to down trading and, you know, when you think about your guidance, the 2% to 4% for 2022, can you just kind of clarify or explain w- what you're factoring for both those two elements? And then the second question still on household care, um, we've seen a bit of news around activism and restructuring, um, one of your big household care customers, Unilever, and in the past, I think in the industry when we've had activist cases or cost cutting, um, it's led to lower levels of customer innovation and, and reformulation. So I was wondering whether you see this as a risk? Or whether you're seeing anything, whether you see this as a risk this time around for you, or, you know, what has changed in the household landscape versus a couple of years ago? Thanks. Thank you, Nicola. And Hanas, could you please, uh, take those questions? Yeah. So thanks. Let me start with, uh, with Europe and what's, what's going on. So, uh, the result of, uh, the performance in the retail market was that laundry, which is, by far, our largest single segment, is down 5% on volume. And, uh, the way we look at it, it's a few different, uh, sort of trends that's going on. We see customers, they are trading down to, uh, lower, uh, tiered brands. We also see the customers are washing a little bit less than what they did last year. And then of course we see the private label segment being under a lot of stress and stress comes in different forms. It comes with, uh, two, two of our LA midsize customers have gone out of business, but also comes in, in a way, where you can see that they're actually losing substantially more than, uh, than the big brands. And our exposure to the private label market, uh, has traditionally been, uh, been quite strong. So from that perspective, we also get, um, ge- quite, get quite some, some challenge in Europe. And I think when, when you look at the guidance for the full year, uh, looking at household care, uh, Europe is actually the single and only area compared to our plans that de- delivers the deficit to our original guidance. So that's what's going on. Looking ahead on Europe. Uh, we plan for a flat European market next year. Uh, we believe that, uh, we have sort of seen the bottom of this. We also believe that the private label pain that we saw that that will travel to other private labels. So for us, then that's, um, I think, a good, um, belief that we'll see sort of the\u2026 we've seen the bottom of the European market. Now, if we turn to the next, uh, question, uh, this is very\u2026 it's, it's difficult and, and, of course, I can only speculate it and can tell you what had\u2026 what happened in the past. Um, of course, we've seen investor pressure coming in and it has shown itself in, in different shapes and forms. Um, this time around, I think it's uncertain to say what's going to, maybe, happen to Unilever. We know that Unilever is on a journey where they are really driving sustainability heart. We have very strong conversations and, and also a very strong pipeline with Unilever and I'm, I'm, I'm pretty sure that some of that will come through. It's too early to tell if there's going to be any negative impact. Right now we don't see it. And our conversations are, are positive towards, uh, towards growth and innovation. I think that's it Very well said there Hanas. Nikola, you did not really, implicitly, ask for it, but I would like to build on, on Hanas' comments on what gives us the trust on the two four\u2026 2.4 guidance, and also on the long term growth. It is the\u2026 For, for one step, very strong penetration of, uh, freshness that we see the broad launch is sticking and, uh, and, uh, dra- contributing to the growth and also contributor to the growth of 2022. The continued penetration of our solutions in emerging geographies that they do grew least this year and they will continue to grow. And then the strong momentum and the pull for our customers for sustainable solutions, replacing chemicals and detergents. All these parameters, they make us confident that there is a growing path and that we are moving in the right direction to that growth path. Next question, please. Thank you. Thank you. Thank you. The next question comes from the line of Lars Topholm of Carnegie. Please go ahead. Your line is open. Yes. Congrats with, uh, another strong quarter. A couple of questions on, uh, on my side. Uh, should the guidance, uh, since you are passing on, the input custom place, at least partly, I just wonder to what extent, uh, that boosts your organic growth guidance and in line with that, uh, both you asked and Lars mentioned that you were off to a strong, uh, beginning of 2022. So just wonder what you mean by that. And if this implies the year is going to be front end loaded. Uh, and then, uh, second question goes on, uh, alternative proteins, because early in the year, you send out a press release, mentioning that you would like to sort of drive the, the creation of a micro protein industry party, or, or I don't know what, what the right word is, is. Uh, to my knowledge, you don't have any significant micro protein products in the markets. Uh, am I wrong? Is this something that is going to, to, to come? Why are you doing this? And should we expect any micro protein announcements going forward? Thank you. Thank you, Lars for, for your, uh, very kind comments. Yes. We feel, uh, very pleased with the results and also, uh, that we expect a good start for, for the year. I'll, I'll let Lars answer your first question and then, um, uh, Amy, uh, follow up on your second one. Yeah. So on, on our assumptions, uh, on, on pricing, um, our 2022 outlook, uh, uh, includes a net neutral impact from price on the top line. Um, we benefit from, uh, our targeted price increases, but we have also included, uh, some volume loss, uh, risks. Um, so, so that's how we have, uh, built our guidance for, for the year, um, while the mid effect on top line is neutral, uh, we expect the minor positive contribution to the gross margin. Um, and, um, and, and as, as I just explained earlier on, uh, we are looking, uh, to effectuate these price increases as, uh, contracts expire. So our commentary on, on being off, uh, or expecting to be off to a good start, uh, it's important to understand, uh, that wording of expecting to be off to a good start, uh, uh, so we are really commenting on the fact that, um, that the, uh, for the first quarter, uh, and, and for the beginning of the year, we, uh, we see and, and expect, uh, the, the momentum we had the, uh, in the, uh, last part of 21 to continue into 22, um, and therefore just trying to set the expectations for, uh, our first, uh, uh, reporting of Q1, uh, in April. So, so does, does this imply around a 7% organic growth rate for, for Q1? Um, so that we are not commenting on Lars, we are just saying that we have, uh, 3% to 7% for the year, and then, uh, that we are, uh, expecting a good, uh, start through the year. No. But you grew 7% in the end of 2021. And if, if you are implying that growth is continuing wouldn't that bring Q1 in, at least in the high end of, of, of your guidance range? So- Or am I completely misunderstanding what you were telling me? So what I was saying is that we were continuing the same momentum, uh, from, uh, Q4. I didn't say we would have exactly the same growth rates. Um, so, uh, so I think if anything, uh, we, we are saying that we expect the first, uh, quarter of the year to be, uh, at least on average, uh, for the full year, uh, growth. And, and I think that's, as far as we can, uh, help you on the first quarter, uh, expectations. Fair enough, Lars. That's fair enough. And if I take the second question, uh, Lars, run alternative proteins, um, maybe to, to put this into context, um, our alternative proteins, um, development really fall into the two categories, if I link it back to the strategy. The first one in the expense space, which is our investment in Blair and everything we're doing in that area, which, um, would be hitting us within the next three years, in terms of really scaling up into growth. And then we have a piece of what we're working on, which is into our Explorer category from a strategic perspective, which is really looking at 2025 and beyond. Um, and that's really where the micro protein falls into play. So the announcement we made, um, last year was a around an open call for innovation around micro proteins, really looking to couple the work that we're doing internally, from an innovation perspective, with outside innovation and creating, um, an environment and a network, um, to accelerate innovation in the area. So we don't have anything that you should be expecting in the next year, um, this is really about that explorer area into micro protein for the long term growth. But, but, but, Amy, ju- just to follow up on that, doesn't that mean it would be fair to assume that if we take a, sort of, five year perspective, uh, you, your alternative protein portfolio, five years from now, should be significantly broader than what you have already announced and, uh, investing specifically in, in, in, in Blair? I think that's fair from an aspiration perspective, right? So, I mean, what we've announced with Blair would be that, three years following the startup, we would reach a billion DKK of sales. This micro protein space would be, beside that, but again, on a longer term basis. Thank you very much, Amy. Thank you. Our next question comes from the line of Alex Jones of Bank of America. Please go ahead. Your line is open. Great. Thank you very much for taking my questions too, if I may please. The first on the margin this quarter, I think you talked about 400 basics points lower, underlying EBIT margin year on year, due to sales and distribution, could you give us a bit more color on exactly what in sales and distribution expenses, um, increased? and how we should think about that going into 2022? And, uh, second question on food, beverage, and health. Um, you talked about, sort of, raw inaudible optimization and ingredient replacement in bakery having a positive impact, both in 2021 and expected in 2022. Um, could you give us a bit more color on, sort of, how that depends on, say, commodity prices, um, versus how much is a structural evolution to the banking industry. Thank you. Excellent. Thank you. Very, very, very good questions, Alex. Lars, if you could, uh, answer the first one and then, uh, Hanas built on the dynamics on banking. Thank you. Yes. Uh, absolutely. So, um, so our operational expenses in the fourth quarter, uh, were, uh, significantly higher than they were in the beginning of the year. Um, and this called out, uh, actually already in the, uh, in our release of the second quarter that we were expecting higher operational costs in the, in the second half. And the majority of those, uh, hit in the, in the fourth quarter. So, uh, so what they were, uh, were for example, uh, uh, in c- commercial investments, we had in our one health areas, where we had significant investments in cross channel and cross geography promotion, and new product launches, uh, building on our acquisitions, uh, of, uh, of the, uh, uh, two and now three, uh, companies, uh, in the area. Um, we initiated a number of clinical trials, um, and we also across the businesses, not only in, uh, in the area, one health, but also in the other areas, uh, had, uh, significant investments in, in digital solutions. Um, so those were some of the key factors that impacted the fourth quarter spent, uh, primarily in the sales and distribution area. And when we look forward to, to 22, um, then the fourth quarter of last year is, is not the appropriate benchmark for, for how 22 would, uh, would look like. Um, so, um, so as we set on the, on the gross margin, um, we expected for the year to be one and a half to 2%, this points lower than what we saw for 21, um, um, maybe to give you an idea of, uh, of the other, uh, line items, uh, then, um, admin cost is, is probably, uh, uh, a good assumption to be in line with history at 5% to 6%. Um, we have historically had R&D costs of, uh, of, of 13, um, S&D uh, 11 to 12, uh, but, uh, on the latter too, uh, we have consciously chosen to, uh, shift a bit of our resources from R&D to S&D. Um, so I think, uh, you would probably see a slightly higher S&D ratio, uh, maybe closer to 12, uh, or twelve-ish, uh, uh, and, and R&D, uh, maybe still in line with a, with a 13 or so. Um, so I think, uh, that is maybe a, a good way to think about how the cost composition would be in, in 2022 and arriving at an EBIT Martin of 25% to 26%. And on food and bever- Of 25 to 26%. And on food and beverages, I'll just expand a little bit on how growth is, uh, composed in, in 21. So, the, the major driver for us was very strong underlying demand and innovation and market penetration. That made up more than 2 / 3 of the growth in, in food and beverages. Then we saw especially in the brewing space, uh, some recovery that also supported growth, and then we come to raw material optimization. And absolutely, as you, as you highlight, that was mainly in baking. What happened in baking was we saw certain shortages of raw materials like vital wheat gluten, we saw quite some inflationary pressure on ascorbic acid emulsifiers and so on. And then you can ask, Well, does this stick? We believe when we talk to customers, that it is actually quite sticky. Uh, and that's a business that will continue. Um, our estimate is betrween 2 / 3 and 3 / 4 of this that will stick. And the reason that we believe it will stick is that, um, customers, they use it to sort of drive, priv\u2026 uh, clean labor claims. They of course also do it because of the stability of cost, and then there is some pain associated when we, which would make these reformulations. So all of this makes us quite confident, um, that what we have seen of reformulation and optimization will actually remain in, um, 22 and the years to come. Okay, thank you very much. Thank you, our next question comes from the line of Sam Sansa of SBC. Please go ahead, your line is open. Um, yes good morning. Just two questions from my side. First, on the last, regarding the, the, the market bridge from the 27% underlying in 2021 to the 26.5. If you could just give us the components, um, to, to bridge that gap. And then, secondly, you had quite impressively, product launches, 14 product launches in 2021. Uh, solutions you could say. Could you highlight the most important ones in terms of sales growth contribution over the next five years? Lars. Yes, so on the first question, um, so from the 27% on the line, um, the most, uh, important, uh, facts towards the 25 to 26%, uh, abid market guidance for 22, um, is the lower, uh, cost margin, uh, which we believe, uh, will be 1.5 to 2 percentage points lower than, uh, than what we saw in, uh, 2000 and, and 21. Um, we are also continuing to, uh, invest, uh, in our business, um, and therefore, um, as I just outlined, will our expectations, or at least, the you\u2026 the way you can think about some of the individual cost lines, we're still investing, uh, also in both sales and distribution and also R & D, uh, on a growing top line. Um, so we don't see any significant, uh, out of the ordinary, uh, items in the, uh, in, in, our 2022 numbers. Um, so those would be the, the significant, uh, drivers of the margin, uh, arriving from the 27% last year to, uh, 25 to 26% in 2022. And on to your second question, uh, we make 14 launches, we love them all. Uh, they\u2026 it's, it's hard to choose which is the one we feel more proud of. They all contributing to what it has been already also a trajectory of, uh, where innovation continues to be a strong contributor of our growth. 30% of our sales this year, they were coming from launches we make in the last five years. But if you make me\u2026 if you ask me, Where would you see that contributing in the future? It would be across all fronts. So from one side, uh, we have, uh, very high expectations on our launches in animal, nutrition. On, I guess, including the latest launch we have made, uh, in aforious animal nutrition. Very strong, uh, trend on the momentum in freshness with a broad launch that continues to contribute to the, uh, to contribute to growth in, in household care. Very good momentum in human health, uh, very high level of cross-fertilization on the acquisitions that we brought in and also the, the tangible example from innovation from, uh, from our innovation muscle and then also cross-fertilization across the globe. And then, uh, lastly, not to mention, if, uh, strong trend in the, in the market for consumers for healthier foods. Some by replacement of chemicals as, uh, oh, ingredients\u2026 That's as Hannis mentioned, but the strong, also, driver for nutritional changing habits in seeking for plant-based solutions where our enzymes contribute. If you couple that with, uh, also, a stronger penetration in the margin share office, I have to close your question saying we love them all, and, uh, we pleased with the 30% contribution of innovation, and we know that innovation is a key contributor of our long-term growth. Okay, thanks for that. Thank you. Our next question on the line comes from Sam Perry at Credit-Suisse. Please go ahead, your line is open. Hi guys, thank you for taking my question. If I look at your two-year stack organic growth, your 22 died at the mid-to-upper end in high double digits in mid-term growth on a two-year basis. This is a level that hasn't been seen on a two=year basis since pre- 2015 when commodity prices were also much higher. Similarly, if I look at the midpoint of your sales in eBit growth, eBit guide for 22 is broadly in line with 2016, despite having some acquisitions. So I guess my question is how much of your ability to print these higher growths and earnings numbers is based on changes you've made to the business over the past five years in new innovation, and how much is based on increasing soft commodity prices and customers reformulating toward enzyme-based products? Thank you. We, we\u2026 thank you for your question. Uh, we have launched, as you, as you, recall our strategy in, in, uh, September and, uh, a lot of the fruits that we're seeing today are already from the work made from the past, uh, steps we're taking from the implementation of the strategy. It's a combination of both. We're just capitalizing on the headwinds we're seeing in the market. We're not shy of that, but then also many of those ones, they sticky. They stay. We know that once you've tried our solutions, then our customers fall in love with a value propositions of sustainability that we bring in, and that's a culture across all fronts. In animal nutrition, where we bringing beyond increased prat, uh, protein enhancement, also lower manure, like in baking, where we, it's\u2026 we're moving into natural, and, uh, chem\u2026 uh, formulation, and, uh, clean, clean labels enabling. Or detergents, leading to washing\u2026 consumers who can wash at lower temperatures and replacing chemicals. So there is good momentum, we're capitalizing on that, but that is a lot of self-help. And the self-help comes from, uh, proactive investments we've made in the <unk> office on assets, on people, on labs. The self-help also comes from acquisitions that we have made in human health to maximize the potential that we have as a biotech company and to contribute to the work in, uh, in a very rapidly growing trend on, uh, healthier needs. Same will be for plant-based proteins, on investments we've made in Blair, we're making on Blair, that's one of the key milestones also for this year to move ahead with those investments, and that will be a contributor, also for the future growth. Great, thank you very much. Thank you. Our next question on the line comes from Charles Bentley at Jeffries. Please go ahead, your line is open. Thanks for taking my questions. So I just have two. So one is just around the comments around household care. Um, that Europe has already blossomed and, uh, and private labels you'll see a shifting. I mean, is what you're already seeing in Q1, um, because the guide implies kind of an acceleration versus the Q4 exit rate. So, I want to understand whether this is what you can already see, that in January and then coming through the order book for the rest of the fourth, fourth quarter, or does this assume that this picks up at some point. And then secondly, just on, on, on the\u2026 and just another question on the, the kind of Q4 margins and the commercial investments you've mentioned, I mean, it seems to suggest that something like $100 million in costs in Q4. I think previously you've suggested it would be something like $300 million total. Is that, is that right? Uh, and, and then kind of related to that, what's the, what's the likely phasing on the remaining costs? Thank you. Uh, thank you, Charles. I'll let Hannis answer your first question, and then Lars can you build up on the second one? Thank you. Yeah, so, so of course we have one month in, in the books and it confirms what I said before, that, um, we believe that Europe will look around flat, maybe slight, slight growth. That's what, what, we see now. And that's also what we see in the order books. And I would say on the, on, on the spend in the fourth quarter, um, I don't know, but I assume the $300 million you refer to is, is the costs that we, uh, carved out, uh, all the way back in, uh, in ' 19 when we started, uh, to, uh, sort of re-shape our cost structures towards sales and distribution. Um, I think now we are almost three years later, and I think it becomes very difficult what was, say, carved out, and, and what is now invested where. So I would maybe rather, uh, look at, uh, our commitment to continue to invest in our business, which we also do, and imply in our guidance here for 2022. Um, and then we have also provided the long-term guidance back in the capital markets day that we aim for a margin of 26% in, in 2025 or above. Um, and no individual year going below 25. And, and that's what we're guiding for here in 2022, with a continued investment in our business to support the organic sales growth. Great, thank you very much. We have time for one more last\u2026 One last question, please. Thank you. That comes from the line of Sebastian Bray at Berenberg Bank. Please go ahead, your line is open. Hello, good morning and thank you for taking my questions. They're primarily focused on growth margin development. I can understand why the current raw material environment would mean that the outlook is, let's say, downwards for 2022. What makes me curious is what the company thinks of as its mid- to long-term growth margin? If price recovery is good enough, do we get the 100 to 150 basis points back? Is there anything in 2023 onwards, is there anything to suggest the current decline in gross margins may prove permanent as opposed to temporary? And secondly, a quick question on plant-based meat and products. If I say, as a rough guess, I think Novozymes is making a little less than $100 million DKK in this area on an annualized basis. Am I getting warm? Thank you. Thank you Sebastian, good morning. And I'll let Lars answer your questions. Yes, uh, thanks Sebastian. Uh, so, um, so right now, um, we are, uh, like many other companies, impacted by the higher input costs and therefore we are guiding to a lower gross margin of 1.5 to two percentage points. Uh, we are also seeing that we are taking actions to pass on some of those higher input costs to our customers over time. Um, and therefore we see a small positive contribution from that, uh, pricing initiative on our gross margin. Um, and then I would say we are, we are still continuing to see the productivity improvements we have continued to see for years and years and years, uh, leveraging the scale, and the volume growth in our facilities. So, in the long-term, we still see potential to still expand gross margin from productivity, from scale, um, and then we, we will see, uh, how the future develops both in terms of input costs and also in terms of price discussions. But the fundamental factors that enables us to see gross margin expansion, uh, those are intact. And then of course there are more parameters, like we're now experiencing in ' 22, which will determine the actual gross margin in, in the individual year. Thank you, Lars. And that, uh, closes the session. Oh, oh. Sorry, Hannis. Just build off the second question. I think there was a co-question around protein, and let me just expand on that, and I'll, I'll give you a specific guidance on how much we sell and whether the $100 million is warm or cold. But what we do, we have a sizable business on protein extraction and protein modification that relates to meat patties, both delivering on taste and texture, and reduction on salt. It's a business that's growing very very nicely right now. And of course when you look at the trends, we have a lot of hope and faith that we'll continue to grow for all Novozymes. And now yes. Thank you very much for all your questions. Thank you for your time, and looking forward to continue the conversations with you in the forecoming days. Wishing you a very nice day. Thank you."
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     "transcription": "Good morning and welcome to this presentation of the SSAB year-end report. Uh, my name is Per Hillstrom. I'm head of Investor Relations and with me today is our President and CEO Martin Lindqvist, and also CFO Leena Craelius. And the, the agenda today we will start with the summary of fantastic year 2021. And then, the financials with Leena a little bit more look at the quarter as such. And then, we're also very pleased today to present a plan for a much faster transformation of our Nordic production system. So Martin, so Martin will spend some time to explain what we are looking at there. And at the end, as usual, outlook and summary and we will also have a lot of time for questions here so you will be able to, to ask your questions at the end. So by that, please Martin, start with ' 21. Thank you, Par, and good morning everyone. Um, I will start with a brief comments in the summary of 2021 and it was and is or was a historical year for SSAB with I would say a solid performance in a very strong market and I will give you a couple of examples of that, but, uh, we had an operating profit of almost 19 billion or 18.8 billion in a net operating, operating profit, very, very strong net cash flow and net cash flow 12.4 billion and that meant that we could, uh, close the year in a debt-free position and the board decided at the board meeting to propose the AGM to have a dividend of 5 kroner and 25 per, uh, per share. Of course, uh, a lot of this is due to a very strong, uh, market, but it's also structured. We have seen very strong demand for our niche products. We have seen good and solid, uh, internal performance. If we take safety as one example, we have improved the, the number of LTIs a lot during the year and I would say that that is structurally and we still are not at zero, but we are approaching and doing a good job in the organization. I think also we had the stable and high production. We saw a successful ramp up during the autumn of 2020 after very challenging 2020. We saw record output in several production lines. Uh, we have managed I think in a decent way to handle problems even though they are not fully over with the COVID-19 in, in the, uh, at the production sites in the organization. We have also had problems with the supply chain issues, shortage of rail cars, uh, sea transports, uh, trucks and so on both during the full year of 2021 during Q4 and also into Q1 2022. Uh, it was a remarkable year in many aspects and I think, uh, the first volumes of fossil-free products that we delivered, the first fossil, uh, commercial volumes to Volvo was a landmark for SSAB and we have during the year and are continuing with that to announce a number of strategic, uh, agreements with customers and, uh, we have or the board has to take in a decision to, uh, speed up the transition and taking a, dire- directionally, uh, decision to, to, for a faster transformation. I will come back to that in the end. But we have not also market wise only served on, on, on a strong market. We have actually been able to continue to deliver on our strategic targets. If we look at, uh, specialties in 2021, they almost reached 1.5 million tons and I would say that they would have reached it if we wouldn't have had the transport, uh, call it challenges. So they are going to reach the strategic target of 1.6, uh, million tons at the latest 2023. Services is moving on. We haven't done any major acquisitions during the year, but we are on our way to reach the strategic targets. America's premium share improving over the year and looking at SSAB Europe, we are fairly close to the strategic target we have for 2023. 43% being the outcome of premium share 2021 and still a lot of things to do. Automotive, of course, a segment affected by a shortage of semiconductors, but still a good growth and if we look at the premium volumes in SSAB Europe, we already ' 21 reached the target for ' 23. So ahead of plan, still a lot to do and a lot of interesting prospects. And the Nordic market share in line with, uh, our long-term target of between 40% and 45% Nordic market share. I said in the beginning it was a marvelous year. We had record earnings in all divisions. We had very good EBIT margins, good profitability, and all together the EBIT sum- summed up to almost 19 billion, but, uh, Leena will give you some more details on the financials. So Leena, I hand over to you. Thank you, Martin. Yes. Uh, it is really a privilege to start in my new role with these kind of figures, which I will go through briefly. Um, in this, uh, slide if, if we look at the, the graph on the right hand side on the bottom, we can see the EBITDA improvement quarter by quarter during this year. And definitely the market was favorable. Prices were increasing throughout the year, uh, volumes were on the lower side during the second half of the year and the problems already Martin mentioned, uh, but if we say that the market was favorable, I would also highlight the good performance of the whole organization. I already discussed about the premium mix improvement, uh, Europe division, America's improving the premium, uh, portion of the sales, uh, and also special steals delivered higher volumes this year so good work in the sales in that aspect. Also, the stable production improvement since last year, uh, that is giving, of course, big benefit for the profitability. So we can say that good achievement also in that aspect and also the cost efficiency, we were sustaining a good cost efficiency during the year. So all that shown in the figures related to EBITDA. And then, uh, uh, quarterly figures isolated Q4 comparing to last year, telling exactly the same story. Prices on much higher level, they are compensating well the higher raw material. Uh, cost base, uh, volume slightly lower compared to last year's, uh, fourth quarter. Fixed cost on a higher level and this is now mainly related to maintenance activities where we had the shift in timing. America's division did the big maintenance during Q3 last year and this year we did it instead of during Q4. Also, mobile maintenance, uh, which was done during Q4 is something we do only second, uh, every second year. And then, the other half is related to personal cost with these high earnings, we are realizing, uh, profit sharing programs. And then, if we compare Q4 with the Q3 outcome prices did continue to go upwards, uh, compensating again higher raw material cost base, volume slightly lower, partially seasonality of Q4 related and also these transportation problems that Martin already mentioned. Uh, fixed cost in this, uh, comparison more related to seasonality. Q3 is a vacation period. And then, as you can see the utilization of the capacity was higher, a task the, the materials and services also higher in line with that. All this good performance led to a strong cash flow, uh, Q4 cash flow, net cash flow ended on the level of 5.3, uh, 4 billion, and the full year 12.4 billion. Comparison high level with last year, definitely the earnings played important role. They were much higher compared to last year. Uh, some negative impact with working capital with higher inventories, but nothing to be alarmed about, because the net operating working capital over net sales did develop really well during this year. Maintenance expenditures on a higher level. Financial items slightly lower. Taxes naturally higher with this level of earnings. Strategic investments were somewhat higher and this is now mainly related to the Oxelosund conversion started and we will continue during next year as well. As said already in the beginning, the target set for year-end to be net debt-free, we reached, and actually exceeded the gearing ratio at the end of the year being negative minus three, while last year it was 19. So the net, uh, cash position positive 2.3 billion. Then, when we look at the next year forecast on high level, um, the CapEx activities will increase during next year and this is now mainly related to the Oxelosund conversion. We were indicating CapEx need for this year 33.5 and we were slightly below three. And net interest to be somewhat, uh, lower for next year. And then, the taxes higher and that's due to the incurred taxes this year will be paid out next year. So on a total level 8.5 is the total cash need estimate at this stage for next year. Very briefly about the raw material view going forward or actually this is illustrating the history. Um, the iron ore peaked during ' 21 started to come down luckily during Q4, but the latest, uh, development is, again, upward. Uh, so the outlook for iron ore for Q1 is that it will be on a similar level than Q4 with an upward risk. And then, the coal prices they continued to increase, uh, second half of the year peaking upwards and they will continue to increase also during Q1. This is only few of the raw materials, the bigger raw materials and we know that the alloys, for example, zinc and other materials will continue to go up. So overall the cost base is expected to be somewhat higher for Q1. And very briefly scrap prices this is illustrating the US spot prices. They were on a higher level for Q4. Uh, coming down mainly seasonality for January and the outlook for February is that it's stable or might be going upward, so that's still unknown. But then, regarding outlook and other issues, Martin will continue. Thank you Leena. So some words than, uh, about the accelerated Nordic transformation and to start to give you some background, uh, back in 2017, we formed the HYBRIT joint venture together with Vattenfall and LKAB. And we also inaugurated the world unique, uh, pilot plant for producing, uh, sponge iron, fossil-free sponge iron in 2020. During last year, we, uh, uh, delivered or produced the first, uh, sponge iron, uh, fossil-free sponge iron in that pilot plant. We also decided to, uh, we plan started, the plan for, to reach commercial volumes of 1.3 million tons in this project or fossil-free sponge iron in 2026 in line with the, the need and the demand in, in Oxelosund. We then in August rolled and delivered the, the first fossil-free steel and that was, uh, delivered to Volvo Group, uh, to their new TARA machines. So in this partnership, we have, uh, created the foundation for a fossil-free value chain all the way from the iron ore being up in the mountain in the north of Sweden until finished products. In this example, the TARA machine from, from Volvo Construction Equipment. So this is, uh, what we have created since 2016. We have also seen a lot of interest from customers, in, uh, existing customers in our important and focused segments. These are examples of partnerships that we announced, uh, during last year. We have also seen that the demand today and especially in the future exceeds, uh, the planned supply of 1.3 million tons in 2026. And the demand is not only bigger but also broader, uh, than we currently have the ability to produce. And I would say a big part of it is within the mobility segment, advanced high strength steels for automotive and for heavy transport. And we have had and continue to have and that is only increasing new customers in those segments approaching SSAB wanting to sign partnerships and take part of this development. So we have decided or the board has decided to start the feasibility study with the ambition or the to, to accelerate the Nordic, uh, strict production system. And the idea is to build a new mini mill in Lulea and one in Raahe and close existing blast furnaces and steel shops and so on. So build two new compact high efficient mini-mills with a scale of roughly 2.5 million ton each which is in line with current capacity. We expect to complete this transformation during the coming 10 years and that is the time is good, because that is before the next scheduled blast furnace re-aligning and the next schedule invests, big investments in coke oven batteries and so on. So the timing is perfect around 2030. This will allow us to expand the product range in terms of grades, dimensions, and quality within current specialty and premium strategy. As one example, we will be able to produce Q&T 2 meter wide with thin gauges, which is asked for by the market. This will also give us a capability to run a flexible load of HPI sponge iron and recycle scrap. So part of the discussions and, and the partnerships we have with customers is to reuse, uh, the virgin scrap so to say. We will leverage existing downstream assets, uh, for the new mills including Borlange, Hameenlinna, <inaudible> construction, cut-to-length facilities. And we will build both mills, uh, fossil-free from the start including power supply and I will come into some details. If we look at, uh, this graph showing the possibility to reduce with 8 million tons of carbon dioxide per year, 15 years earlier than planned. If we just put what the cost might be or where it is close today or in 2030 without free allocations, because the free allocations in Europe will go away. That by itself is equivalent to 7 billion per year in cost avoidance by doing this fossil-free, but this, of course, overall strengthen our ESG position as a company. If you look into the benefits with these type of mills, I would claim that this will give us the possibility to have a structural and long-term profitability uplift. If we look and start with the commercial be- benefits, we will have a broader range of specialty and premium products. We will be able to increase the sales to Nordic customers in areas where we don't have capacity today and that is asked for. One example is, uh, galvanized material. We will have a much faster ramp up of fossil-free steel volumes in line with the market demand. If we look at the operational efficiencies, we will have a much better cost position. Lead times will be completely different. Today we have lead times of 6, 8, and, uh, sometimes 10 weeks. We will build mills with lead times below two weeks. We will have said avoid costs for CO2 emissions and we will re- de-risk the carbon dioxide cost exposure and we will also take, try to take away this less small, the small last part of, of, of, uh, emissions by also looking into using biofuels in Oxelosund to become 100% fossil-free. If we look at the increased operational fle- flexibility and as, you know, we are used to run mills like this. We have two of them in US. We will have lower fixed costs and a much better ability to adopt to, to swings in demand. It's much easier with a mini-mill and electric arc furnace. It's in practice, if you put it bluntly, uh, red and a green bottom when the, when the business cycle is good, you push the green button and when the business cycle is bad, you put, push, uh, the red button. Uh, so much more flexibility than running blast furnaces that are typically built for being run 24 / 7 in 15 years or 20 years. And then, you do a re-lining or coke oven batteries that you run 24 / 7 in 30 to 50 years without flexibility. We will also have a better raw material for, uh, flexibility. We can use both fossil-free HPI from the partnership in HYBRIT and we can also use recycled scrap from internal operations and customers scrap that we are typically today selling on the market. And then, of course, we will be able to reduce or any avoid, avoid reinvestments in existing coal based operation. And as you might know, many of our, uh, operations were originally built during the '60s and the '70s. So we will have a modern mills, state-of-the-art mills with much lower CapEx needs. We expect this when we move now and start the feasibility study to cost around 45 billion for the coming 8 to 10 years, uh, and that includes Lulea, Raahe, Borlange, and Hameenlinna, but it is excluding the conversion in Oxelosund that costs 5 billion on top of it, this. And if we look at the investment plan up until 2045, I would say that this is similar or even lower than the existing plan to keep, uh, uh, ma- ma-maintenance of, of the assets we have today and moving into, to electric arc furnaces. So we will have a much more strategic and future oriented investments in this case. And we, when we look forward, we see that we have the ability to fund this transition with our own cash flow. And, uh, when we look at, uh, and we will come back with updates when we do the FIDs and so on, but when we look at the overall calculation this is a very interesting investment case, but we can't do this only by ourselves. We need help with some things from the society. Of course, we need environmental permits and have an efficient environment, uh, permit process that is maybe a little bit less worrying. What is important though is that we have fossil-free electricity at the right time, uh, at the right place. So, so we need to work with electricity transmission and make sure together with society that we can deliver that together on time, but if we can do that, we have a very good opportunity, uh, to be fossil-free 2030 in line with the growing market demand. So the way forward, we have initiated the feasibility study for Lulea and Raahe. We will start immediately the permit process, uh, already now and we will come back within information about sequencing and, uh, in financial guidance to when it is available. So we will keep you updated as we move on with this, uh, project. Then, outlook and summary for the year. When we look into Q1, we continue to see healthy demand in many sectors and many areas, uh, and especially for Q&T and advanced high strength steel. We see, foresee a solid demand in Q1. There is always, of course, uh, in Q1 as it was in 2021, in Q4, uh, questions regarding transport capacity and also the development of the COVID-19 situation, but right now it's not worse than it was in Q4 so, and hopefully this will ease up during 2022. So when we guide and look at shipments and prices, we expect higher shipments in special steels, Europe and Americas in Q1 versus Q4. Stable prices in special steels, somewhat lower prices in Europe and stable to somewhat higher prices in Americas. And as Leena said generally higher raw material costs and fuels and bottlenecks within transportation will continue in Q1. So we sum it up, before we open up for questions. Strong earnings, strong cash flow generation, high and stable production, good work with continuous improvement what we internally call SSAB-1, better safety performance and a debt-free situation with the net cash position end of 2021. The board is proposing a dividend of 5 kroner and 25 euro per share. And we have a plan for an accelerated Nordic transformation that, that will meet customer demand. And for fossil-free products within our segments, we are doing a step change, we're planning for step change when it comes to efficiency, flexibility, and co- and cost position and we will be able to eliminate, uh, carbon dioxide emissions 15 years earlier than the previous plan. So with that, uh, I think we open up for, and Leena, we open up for questions. Yes. Uh, we will do. Just, just a few words. Uh, we have good time now for questions, but I'm sure there's a lot of questions. So maybe in the first round, keep it to a couple of questions and as always please state them one at a time to make the, the process a bit easier here. So by that and I would please ask the operator to present instructions. Thank you. If you wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. Once your name is announced you can ask your question. If you find it's answered before it's your turn to speak, you can dial 0-2 to cancel. Our first question comes from the line of Alain Gabriel at Morgan Stanley. Please, go ahead. Your line is open. Yes. Hi. Good morning, everyone. I, I have two questions. I'll start with them one at a time. Uh, firstly, on the budget for your green state transition. Uh, how much do you expect to obtain in funding from the Swedish or EU government knowing that Oxelosund was the only site to have received the EU innovation fund backing back in November last year, uh, given that your <inaudible> are also expecting almost 50% funding for their projects? How much do you expect <crosstalk>? Ah, we, ah, we, we, in our calculations we have done that, this with own cash flow, and then if we would get some funding, we haven't calculated with that. So, so, uh, the 45, 45 billion is what we believe it would, uh, cost maximum and, uh, we see that we can do this with our own cash flow generation. Okay. Thank you. And the second question is what would be the maximum CapEx that you're willing to tolerate in any given year, uh, from now until, until the end of the project? And what does that mean for your capital returns strategy and your dividend, um, say for example in 2022? We will not, uh, change the dividend policy. We were, we, and the proposal for 2021 is in line with, uh, the dividend policy. We will not change that. I think, uh, we are in a position with the net cash position, uh, when I look forward and look at, uh, demand development, cost development and so on. We, you should expect us to continue to generate, I've been saying this for many years now, <laugh> but you should expect us to continue to generate strong free cash flow. And then, we will, uh, use that, and of course this is, uh, money belonging to the shareholders. We will use that, uh, to invest and also to pay dividends. And in terms of max- your maximum CapEx tolerance per annum? No, but that will, of course, change over the years and, and I mean now we start the feasibility study and we are running, uh, the Oxelosund project so, so, I mean, uh, it, it will be a bit, uh, call it back end loaded the, the, the rest of it. So, so and we will have possibilities to adjust that over time as well. We don't have an, uh, uh, one figure saying that this is the maximum, uh, investment level we will have, but what we know is that we, instead of investing in old equipment we will invest in, in brand new equipment. Okay. Thank you. Thank you. Our next question comes from the line of Tom Zhang of Barclays. Please, go ahead. Your line is open. Yes, morning. Thanks for taking our questions, um, also to take them one by one. The first question. I was wondering if, um, you could help us understand what sort of the net CapEx is, because clearly you're avoiding, as you mentioned coking battery, um, CapEx, some other CapEx that you would have needed if you kept blast furnaces, I was wondering if you had a number on effectively what the net CapEx, uh, expenditure is over the next 10 years if you deducted those costs? But if you take them, uh, as I try to show out, I mean what we see running the existing operations, uh, for the period I showed on the slide will cost slightly more. And to give you some examples. The re-lining of the blast furnace is roughly one and, uh, one to one and a half, around one and a half billion. Uh, building a newer, re-aligning a coke oven battery is much more expensive than that. And then, we have, uh, steel shops and a lot of other things. So I would say this is compared to the previous plan a bit more front loaded, but, but the absolute terms are actually slightly lower. Okay. Fair enough. And, um, second question just on US plate pricing. I'm wondering if you're feeling any pressure there given plate looks to have overshot HRC quite materially now? Do you think there are any sort of risk that normalizes or do you think this kind of plate HRC spread could, um, an elevated spread could be maintained given sort of infrastructure demand? Very good question, but I would say that what we saw regarding the spread of HRC and plate last year was abnormal with HRC being much higher than plate. What we see now is more a historical pattern. Will that, uh, stabilize and be there forever? I don't really know, but we see a good underlying demand for plate in North America, and especially for, for infrastructure purposes and others, but where the spread will go, I was surprised to see the negative spread, uh, last year to be honest. Um, okay. Yes. That makes sense. I think this spread now, at least, from the numbers that I see are quite a bit above historic normalized, um, but, but it sort of feels like, yeah, and the market demand is there to certainly stop it going negative again. Um, okay. Those are my questions. Thanks very much. Cheers. Thank you. Our next question comes from the line of Seth Rosenfeld of Exane BNP Paribas. Please, go ahead. Your line is open. Good morning. Um, thanks for taking our questions. I too, I'll take one by one first on decarbonization and second on special steels. Uh, with regards to the decarbonization strategy, can you just give a bit more color on the raw materials plan, uh, you know, flexibility between scrap and HBI, but from the HBI side, you're reliant on HYBRIT. Uh, can you walk us through the plans for expansion of the HYBRIT, uh, green HBI capacity and what the additional CapEx implications would be for your contribution? I'll start there, please. Uh, what we have, what we are planning for right now is the what we call the demonstration plan, which is a full-scale production plant of 1.35 million tons, and we have announced that that will be built by the partners up in, in, in <inaudible> in Northern Sweden. Then, of course, we are discussing other plans also to, to step up these investments and LKAB is doing that. So we are doing this in a joint venture and, and a partnership so, so this fits, uh, uh, together with, with the plans for the value chain. So our ambition is to build a fossil-free value chain and have fossil-free steel available from that fossil-free value chain, uh, uh, for our customers. And that will of course be dependent on the, on the future demand, but, uh, what we see right now is that, uh, the demand is stronger than we thought and in the partnerships we have signed the ambitions are, uh, quite strong. So, so we have a good, uh, quality, good, good prospects for the future in that aspect. Then, of course, we need, of course, uh, power supply in order to, to do this transformation. The power generation is there and, and the power generation is being built out but we also need a, a power supply so that I would say will be time-wise maybe a, a limiting factor. Okay. Just to follow up on that. If by 2030, you're using exclusively green inputs, how much HBI do you expect to be consuming compared to about 1.3 million tons currently under development? Yeah. Of course, much more. Yes. Uh, we haven't said\u2026 I mean we are moving now into the feasibility stu- study and we, we can flex between, uh, HBI scrap and, and, and recycle the, the virgin scrap so to say. So, so I said we, we are not using the scrap today. We can get scrap back from customers and, and use internal scraps. So, so the exact balance we need to come back to. Okay. Thank you. Um, and I guess one last question, please, on special steals. Uh, can you just talk us through the medium-term outlook for price realizations? This is a business that historically has been a lot less volatile than the Americas or Europe businesses, um, with some price pressure being realized today in the spot market, how do you think about special steels going forward? If, if we take a step back and look at the EBIT margins that I showed on the first, uh, one of the first, uh, pictures, you saw that, uh, Europe and Americas had better and higher EBIT margins than special steels, which is typically the case in a very strong market. Uh, so, so you're right. Special steels is, uh, they are much more stable, uh, margin wise and price wise, less fluctuations and, and less volatility. What we see and what we saw during 2021 is structurally increasing underlying demand and we have seen that for, for quite some time and, and that is the important part. So they will continue to grow and I, I would bet you that we will meet the strategic target of 1.6 at the latest, uh, 2023. So, so we are following the planner. We are actually a bit ahead of plan, uh, but less volatility and more stable, uh, margins all the time. But the underlying demand is structurally growing. Okay. Thank you very much. Thank you. Our next question comes from the line of Alan Spence of Jefferies. Please, go ahead. Your line is open. Uh, yeah. Thanks, guys. Um, similarly two questions, take one, one time. The first one on, on decomposition. Um, how long do you anticipate the feasibility study to take? And what is your assumption around through cycle profitability that allows you to finance a lot of cash flow? Uh, I must apologize, uh- The first question was on, the first question was on how long before we can see the feasibility study? We have started a feasibility study and we will, uh, gradually get more and more educated. But I would say maybe one and a half, two years, maximum. Okay. And the second part of that one was, what is your assumption around through cycle profitability so that you can finance the CapEx out of cash flow? Uh, when we look at, uh, the long-term profitability and cash flow generation including these investments, we see that we can finance this over this period. Uh, that's our base assumption. Then, of course, uh, when you do projects like this you, in Swedish, we say, <unk>. You, you need to be really sure about that and we are very confident that we can do that. Okay. Thanks. Uh, the second one on Europe, um, in 2021, you achieve your, um, tonnage target for premium volumes. What's, what's kind of an upside target for, for ' 23 or where do you see that going? Oh, I see we have a, a lot to do on that target and especially within automotive where the demand has been affected by shortage of semiconductors. We have excellent products and some products they're high, uh, the martensitic steels up to 2000 mega pascal, which where we are world unique. We, we know the platforms. We have, uh, are, uh, we are, or we're into and so on. So, so I, I see a lot of growth prospects for, for the, uh, automotive part as one example. And we have also invested in Borlange in the continuous <inaudible> line, uh, to take up the capacity. So, so we have, uh, we have plenty of opportunities to continue to grow that, uh, premium mix above the target of 2023. Thank you, and just if I have one last one, just quick confirmation. Um, if the feasibility studies take one and a half to two years, can that, can you just confirm that there'll be no CapEx spent on those projects until those studies are done? No. Then, but there will be some costs. I mean with, with consultants internal work and so on. So, so, uh, but, uh, to be honest, I'm not sure it will take\u2026 I, I don't have the exact, uh, days and months it would take the feasibility study, but, uh, fair guess from the top of my head would be one and a half to two years. And then, we know the cap. And then, we will take the decisions, uh, mill by mill so to say. Okay. Thank you. Thank you. And our next question comes from the line of Luke Nelson at JP Morgan. Please, go ahead. Your line is open. Hi. Thanks for taking, uh, my questions. It's two for me. Tell them one by one. Firstly, again, just on, on decarburization, um, maybe just more around the funding side of things, uh, and follow on from the prior question that sounds like CapEx is, is probably going to ramp up in a year or two time. So 2022, um, will sort of still be a CapEx light year from, from that side of things. I, I suppose in that context, it's, it's likely gonna be a, see a significant increase, again, in terms of balance sheet strength and the net cash position. Um, how should we be thinking about that surplus capital over, over the very short term? Is it likely that it's, it's sort of going to be kept more as a war chest, um, in advance of that CapEx spend, um, or is there still an ability to maybe return, um, surplus capital back to shareholders in, uh, the, the new term? I'll start with that. Uh, I think we, we have a clear dividend policy and we will follow that dividend policy and we are obviously in a different position right now with the net cash position and as I said, uh, I've said it many times and I have a tendency of repeating myself on that issue, but, but you should expect us to continue to generate from operations, uh, strong cash flow and, and have a good cash flow generation and we are not done, even though I think, uh, Leena was rightly so impressed with the development of net operating working capital over sales, we actually had a lot of inventories at the end of the year, because, due to transport pro- uh, product problems and so on. So, uh, I think we will have a solid, uh, cash flow generation for the coming years and for the future. And then, we will use that cash flow wisely. Uh, as I said it belongs to the shareholders. We will, uh, live by the dividend policy and we will do investments that we believe is, uh, good investments for the future. So it will be a combination. Thank you. Uh, second question is it's more just on the CapEx figure itself. Um, can you maybe, uh, clearly there's subject share a feasibility study, uh, and confirmation of that. But maybe can you just talk about to what extent there's contingencies built in within that figure from things like cost inflation, uh, and overrun, um? And then, maybe just in terms of how much of the, that, that budget is fixed versus still subject to change and maybe assumptions around it, things like that <crosstalk>? Of, of, of, of course, of course we have done our homework and done our calculations and, and we are of course not willing to put ourselves in a situation where we would over exceed, exceed that, uh, call it the round and rough figures. So that there are continuous built into that number. Yes. Okay. Great. I'll leave it there and now I'll jump back in. Thank you. And let's come back, let's come back to the issue when we have the FIDs and the investment cases ready. And then, we can talk about profitability, internal rate of return and so on. Okay. Great. Thank you. Our next question comes from the line of Christian <inaudible> of Citigroup. Please, go ahead. Your line is open. Um, hi. Thanks for taking my question. A couple of questions have already been asked, but a follow-up on, on CapEx. So I mean with the Nordic system plan in place, we can see four large bucket of the CapEx, which is sustaining CapEx, uh, contribution to the HYBRIT, uh, development, obsolescence, conversion CapEx, and then on top of that Nordic system CapEx. So is that a fair way of looking at, at your CapEx pipeline for the next 10 years? And then, can you help us, uh, you know, estimate the CapEx for beyond 2022, um, in terms of all these four buckets what should we think about, kind of a, you know, incremental CapEx in 2023, ' 24, ' 25, um, in these four buckets? No, but I, what we are saying is that the transformation of the building of two modern high efficient mini-mills in, in the Nordic production system including investments in Borlange and Hameenlinna and some other that will cost roughly 45 billion. We have also said that the conversion of Oxelosund will cost roughly 5 billion. So these are the two main buckets. Uh, Oxelosund will, uh, uh, as communicated earlier, be up and running already 2026, but then also when, you know, that, uh, we are not going to run the existing facilities with the blast furnaces and coke oven batteries and so on, uh, for the, for the long-term future there will also be a bucket of CapEx avoidance in existing facilities. I mean right now, we are up, until now, we have been running them as going concerned, meaning that they would run forever. So you have, you have a bucket, bucket of CapEx avoidance as well. And then, how that plays out every year and so on is a, a bit too early to say. But, uh, in the 45 billion, we have contingencies and we will come back to call it, uh, FIDs for, for, for each, uh, investment. This is a directional decision and this is the starting point of, of a vision and an idea of, of speeding up the transformation of the Nordic strip system where we have done a lot of homework, of course. Sure. Sure. Um, thanks a lot. Um, and then, a quick shorter term question on working capital. So you've already invested close to 6 billion in working capital in 2021. What should be kind of from a modeling perspective, what should we thinking in terms of working capital in, in Q1, uh, at least from a direction point of view? You will, of course, be dependent, uh, on the market, but you should not expect us to massively invest in working capital. Quite the opposite. Okay. Okay. Thanks <inaudible> Thank you. Our next question comes from the line of <inaudible> at Credit Suisse. Please, go ahead. Your line is open. Thank you very much. Uh, two questions from my side. The first one is on the current order backlog in Europe and North America. Do you see any change in patterns, uh, currently, probably for second quarter given the high seed prices still in your order book? Um, means is there any standoff or do you think, um, the good order intake will also continue into the second quarter so the first half is pretty much, um, I believe done? That's the first one. <laugh> And, and typically <inaudible> for the coming quarter and the order book for Q1 gives us, uh, the courage to, to give the guidance we have. Uh, then, I said create this question mark, uh, the transportation system is a question mark, but the order book gives us, uh, clarity in Q1. Am I expecting, uh, the work to break down first of April? It doesn't look like that right now. No, and can I add also, Martin? Okay. We, we believe that these shortages will probably ease during the first half. Yeah. At least, at least, that's, that's our base scenario. Then, as I said we don't know but, yeah. Okay. Perfect. That helps already. This second question I have is also on the CapEx for 2022. Um, you mentioned around 5 billion, at the same time we see that your targets for SSAB services, for example, to achieve 4.5 billion in sales, um, and out of it one and a half billion through acquisition is still on, so, um, ideally you need to actually, um, execute on this within the next 24 months. Um, is this 5 billion CapEx number including any ex- at least, any acquisition CapEx? Yes. Is it already included? Yes. Okay. And, and I was, I was partly, partly wrong during my presentation, because we actually did some acquisition with S- within SSAB services during 2021 as well. Okay. Perfect. Thank you. I just want to clarify that. Thank you very much. Thank you. Our next question comes from the line of <inaudible>. Please, go ahead. Your line is open. Uh, yes. Good morning. Thanks for taking the question. Uh, maybe let, let me get back to the, um, to this decarburization plan which I guess is pretty impressive, uh, for the rest of the industry. Um, when you talk about the motives to advance that much, uh, I, I take the point on, on the demand, but I guess with the longer term perspective, this is probably what you expected anyway that the green steel is becoming what the, uh, the main product the market is demanding for. Are there any other points why this is being accelerated that much? Uh, looking at Oxelosund, you have been discussing these issues with infrastructure and permitting and the power cables and so on for quite some time, so what is giving you the confidence from that background that you can move that much faster than, than previously anticipated? I think, uh, I think it is a bit less complicated up in Northern Sweden and Northern Finland, uh, uh, for one reason. We have learned a lot as well during this process, but, but the underlying factor is, uh, the increased demand. And when we started this project together with LKAB and Vattenfall, we were not really foreseeing how the demand would, uh, develop. And I think also we have a unique position here up in the Nordics, because we have surplus of fossil-free electricity. We have the right iron ore. We have the knowledge and we have now also proven that we can produce this steel. And, and that is a, a good, uh, have been asked for by the market and has been creating a lot of interest in the market. I also think that, uh, we have with, with us pre- prerequisites the possibility to, to bring and start to, to bring mini-mills to Europe, which has not been the case before and we have experience since 20 years of running mini-mills and you see the development in North America now with quite, uh, I mean take Steel Dynamics in Sinton as an example, quite impressive being built with, with capacity and cost position and capabilities that fits us very well and we see the possibility to broaden our product offering. One example was to meet the why the Q&T with thin gauges that is asked for by the market, but where we don't have the ability to produce today with, with good cost efficiency and productivity. So it's a lot of reasons, but, but it starts with the, the increasing demand from the market and the marketplace and if you should do this anywhere in Europe, I think you should do it in, in, in Northern Sweden and Northern Finland. Okay. I think that's a fair point. And, and Martin, maybe can, can we come back to the CapEx figure? Um, maybe I will, I'm not 100% sure that I got it right. Is the, um, is the, um, the plan including any incremental DRI investments or would be the base case that this could be done by LKAB? And is this, um, are you having now a different stance on the, um, um, on the, um, you know, on the, um, whether you want to be part of this or do you want to have that outside of your core com- competencies? Is this change, is this acceleration now changing your stance on whether what is your core business and, and what is outside of your core? Uh, no. It hasn't and we haven't to be honest really decided. What is important for us is the partnership with LKAB and Vattenfall and the ambition or, or the, uh, yeah, the ambition to create the fossil-free value chain and to optimize that value chain. And then, how we will invest or, or not in that? We, we, we need to figure out over time, but we have been investing in the pilot plant and we are now in the HYBRIT, uh, in the final stages of, of the FID with the demonstration plant. So is DRI included in the 45 billion? Uh, the 45 billion is, uh, what is currently the Nordic pr- uh, strip system. So the, the answer is simple and the answer is no. Okay. And finally, on the ramp up of the, um, this, this, uh, green steel shipment, fossil-free ship, steel shipments. Um, you're saying that you want to have the, uh, the, the commercial, um, <inaudible>, uh, already from the very start, so is this, are you seeing a fair chance that the mill can deliver the full volumes from the very beginning or shall we expect there's a multi-year ramp up? There, there is always on investment ramp-ups. The good thing with this is so that we can build the mills in parallel with the existing mills. And then, when the, uh, new mills are ramped up, we close the existing mills and we can do that before the next blast furnace re-aligning or before we need to spend a lot of money in coke oven batteries and others. So, so from a risk perspective, I think this, uh, is also a way of mitigating risks. So we will not <crosstalk>- Okay. put, put any customers in, in, in jeopardy. Okay. Maybe, uh, maybe I was unclear. Uh, what I meant is on the, uh, on the demonstration plant is, uh, first, 1.3 million tons of fossil-free steel, what kind of timeline do you think do, do you need to fully push and establish that terms in the market? Is this just a, a one-year process or is this rather a multi-year ramp-up phase? No. We are getting more and more sure that we will be able to deliver volumes from that plant to Oxelosund 2026. Okay. Okay. That's clear. Thank you very much. Thank you. And our next question comes from the line of Patrick Mann at Bank of America. Please, go ahead. Your line is open. Good day, guys. Thank you very much for the opportunity to ask a question. Um, it's a bit of a follow-up question just on the possible funding for this and, uh, apologies if I misunderstood the answer or, but I understood that at the moment you're planning for the said 45 to be funded internally from cash flows and you're confident that you can generate that. Yes. I mean is, is there not government funding or government support or European, uh, funds or even low-cost financing available that can help offset some of this CapEx pull and will you be looking into that or is it the case that you've looked at it and decided to do it yourself? No. But, uh, of course, uh, there could be possibilities like that, but that we have not taken that into account when we have done our calculations, but we, we see a lot of interest of, of funding these kind of projects, but I said when we look at the future we see that we have the ability to fund this with our own cash flow, and, and then, how we finally finance it, we, we, uh, let's take that decision when we, we come to the investment, uh, decisions. And as you saw last year, we already then had this sustainability linked bond where we had good conditions on the back of, back of the earlier plan. Now, this is much more aggressive so we will not be in a worse position on that as well. But I think the starting position is de- decent with the net cash positions and, and, uh, good cash flow generation prospects. So, so I think, uh, yeah. Thanks. I, I think the reason there's so many questions on this is because your peers say, you know, they're expecting up to 50% percent of, of government support, right? So I think that's where, where that's all coming from. Yeah. I mean, and then, maybe just one follow up, um- But, but, yeah. Yeah. Okay. Yeah. Sorry. Uh, please go ahead. I'm sorry, Martin. I didn't meant to interrupt you. Uh, no, I was, uh, trying to think out loud and that is not always a good idea. So please, continue. <laugh> <laugh> Um, the, the other, uh, the second question I just wanted to ask that, you know, you did speak a little bit about how this could be positive for margins in terms of, um, you know, the different grades and qualities of steel that you're able to output. Can you maybe just help us think through the economics, the unit economics of this a little bit more? So should we be thinking about this as higher cost, um, steel although you avoid CO2, but at the end of the day you're getting a premium or, or a higher price on average, a higher realized price? I think, yeah, what, what- Um, is that the way to think about it? The way we have looked at this is that we will have a much more cost efficient production with a broader product portfolio. And then, of course, as you mentioned some future cost avoidance. Uh, that is how we have done the calculations. I think there will be most probably a premium to start with and, uh, on, on fossil-free, but I think and hope that fossil-free will be the new normal, and because customers and consumers are demanding that. So, so over time, I think this will be a very cost efficient, effective way of producing fossil-free steel products within our niches and our segments. Understood. Thank you very much. Thank you. Our next question comes from the line of Victor <inaudible> of Danske Bank. Please, go ahead. Your online is open. Yes. Uh, thank you, operator, and good morning Martin and Leena. Good morning. Good morning. Um, just, just, just firstly, could you, uh, please remind us on maintenance CapEx needs for the coming of, so 5, 10 ten years? Uh, at what level is, is that? Well, I think in, and, and they, they have had fairly the last couple of years fairly normal maintenance CapEx levels or if I remember it correctly after around, uh, a couple of billions. Yeah. Uh, uh, 1.8 to 2 billions expense so. And that, of course, we see the possibility to gradually, then, uh, uh, decrease, uh, when we are not, when we know that we will not, uh, run the existing system forever. So, so it will be, uh, uh, call it a gradual, uh, gradually lower and lower. Okay. No. That's, uh, that's brilliant. I, I just think, you know, something quite strong methods in terms of, of cash flows, uh, I suppose or talking about <inaudible> CapEx of let's say of 5.5 billion per year in the coming 10 years. That's a maintenance CapEx of 1.6, uh, you know, you have a historically generic the first 3 billion in free cash flow over a cycle that would imply 10 billion in operating cash flows for the coming 10 years, you know, what, what, what's behind that? Is that, you know, more healthy steel market or- I think, uh, I think it's a combination if you look right now and compared to a number of years ago, I think that the steel market is more in balance. I think also with this, uh, fit for 55 in Europe there will be no possibilities for, for steel companies to hunt volumes, because they will have to pay emission rights. I think structurally maybe healthier from an output point of view and demand and supply balance, a healthier, uh, market, but we are also looking into our ability to continue to shift the mix to less volatile products more, more profit generating products. Then, of course, we will still have volatility, but the ambition is to reduce the volatility as much as possible and that is done with a couple of things. Of course, the most important part shifting the mix towards more stable price, stable, and more stable products. Continue to work with the continuous improvements in order to increase productivity, reduce cost, and reduce lead times. And, and so, we have a number of programs that we are running and I think, uh, that, uh, when we look at that, we see that and do the calculations including continuous and, and so on. Uh, we see that this is clearly a good opportunity and possibility for the future. Yeah. Uh, no. Brilliant, uh, yeah, you know, strong, strong message. Obviously, I guess that, you know, implies normalized earnings of less than 12 billion. Um, so, uh, strong message <crosstalk>- 20- 20- 2021 was obviously a very good year. <laugh> You shouldn't expect us to, uh, generate more than 12 billion in free cash flow every year, but I've been with\u2026 Like a fool repeating myself that we should be able to continue to generate strong cash flow and we are not ready. I mean, yes, we were investing a lot in, in working capital towards the end of the year. Yes. For sure. We'll continue to do that. No. We still, still see, see opportunities to become more capital efficient. And the example with the, with the mini-mills if you reduce lead times from just a simple calculation from eight weeks to less than two weeks, that is also a huge possibility of releasing working capital. Yeah. That's, uh, that's, then, just a question in terms of your Q1 guide, uh, more short, uh, short term. Um, just, you know, to be clear, what you're saying is that cost could come up a bit, prices basically flat, and then you have no maintenance in, in Q1. So I suppose, you know, mixing that together Q1 earnings should be higher than Q4, is, is that correct? We, we don't give any figures or guidance. That's, uh, your job to, to figure out. <laugh> No, but we are also saying that we, we see, we see, uh, problems in the supply chain. We had, uh, end of Q4 and we still have problems with, uh, getting lor- trucks, uh, getting containers, rail ship, rail shipments, uh, boats and so on. We don't know where the COVID situation will end up and when it will end. We have had problems in Q4. We still have problems with a lot of people with a, a high short term lead. The people being in qua- quarantine being sick or taking care of sick, uh, family members. So, so it's too early to say. There are still, uh, some, um, uh, call it, uh, problems, uh, like we had in Q4. And, and they persist into Q1 so far. and remember, remember, remember, Victor, also the prices in Europe will be lower also so. Yeah. Yeah. No. That's, that's clear. And, and just a final very quick, uh, quick question just in terms of returns on the CapEx program. You mentioned 7 billion in avoided as a two costs. So I guess you no, no incremental- That, that, that was one example, but when we look at the calculation and we need\u2026 I said we need to come back to that when we come with the FIDs, but we see this as a very interesting investment opportunity when we look at the calculations so far, otherwise we wouldn't, uh, propose it. But let's come back to that with more details. Yeah. No. No. Okay. Okay. Okay. Yeah. Thank you very much, guys. Thank you. Our next question comes from the line of <inaudible> for CNB markets. Please, go ahead. Your line is open. Yes. Hi, everyone. It's <inaudible> here. Um, yeah. I have a question on, on, well, what you showed on basically slide 18 in your slide package about premiums on the first green steel that you're aiming for I think 2026 or so. Could you elaborate a bit on, on how you see the price premium series? It's sort of one premium from everyone buying fossil-free steel or is it sort of different case by case? And if you, I would so much appreciate if you could give us any sort of help in the magnitude of, of future price premium that you're, you're projecting. That's my question. No. Not really. I mean, uh, we, we think, um, the, the market is very interested. The market is wheeling from start to pay a premium. I honestly believe that, uh, well, there will be might be a price difference between, uh, <laugh> carbon-free, fossil-free steel and, and usual steel where margin difference or, or however you put it, but, but I think, uh, and hope that this will be the new normal. So, so I think it's very hard to say what, what will the premium be over time and how do you calculate the premium. So let's come back to that. I don't have a good answer. Yeah. But we see that, uh, the current demand, uh, is, uh, exceeding, uh, the planned capacity. And my, our base case guess, and I would say that this is a fairly educated guess is that, that demand will not lower over time, and you have seen announcements from companies like Daimler what, what kind of, of pressure they put on their sub suppliers when it comes to scope 3 emissions, and my guess would be and I, I would say, claim that this is an educated guess as well, is that, that pressure will not decrease. I would say quite the opposite. But that's helpful anyway. Uh, and I would also wondering- So, so, so what I, what I see and what I'm trying to say, honestly, is that I see an opportunity, because the location and the knowledge and, and, and, and the partnership we have within HYBRIT and with customers makes this, uh, I mean if you should do this, you should do it in Northern Sweden and Northern Finland. Yeah. Yeah. Got you. I can, I mean everybody assumes I suppose that the premium will be highest in, in the first years when this is a revolutionary product- Yes. uh, let's see if it becomes a new normal or not. Then, then, I have a question also, you mentioned a few times in the presentation margin about that scrap availability seems to be pretty good for you in the Nordics. I mean would it be possible to run the new SSAB set up with, with these sort of scrap in the Nordics? And is it enough scrap basically that you can be, be using locally or how do you see that? Uh, we, we could, we could potentially do that, yes. Uh, run it on scrap as we do in US and there is scrap availability in the Nordics and we are one big producer of scrap <laugh> and our customers using our material. So then, we could also use it, uh, with scrap from the market today. We are selling scrap to the market. Uh, so, so there is a possibility and that's what we try to call flexibility then between HBI and, and scrap. So we will, in practice, have, uh, higher flexibility than raw material flexibility today, than today. Okay. Got you. Thank you. Thank you. Our next question comes from the line of <inaudible> of Deutsche Bank. Please, go ahead. Your line is open. Uh, yeah. Good morning and also thanks for taking my questions. I've got only two quick ones left. So I'll also take them one at a time. Um, Martin, could you briefly talk about the new product segments, which you aim to enter, please? We have, uh, a fairly good idea about that and it is within the mobility sector. And one good example and I won't bore you with too many examples, but one good example is to meet the wide Q&T which is, uh, and thin gauges, which, which is asked for by the market and we are not in a cost efficient way able to produce that today. I mean the quarter mill in Oxelosund is, uh, not, uh, an optimal setup to produce, uh, I would say thinner gauges than four millimeters, and, and with these mills we can produce one, two, three up to four millimeters. Uh, so, so we will have a broader product offering. We will also with this mill what we are lacking today and what is asked for is, uh, and where we have a fairly low market share is galvanized products, uh, especially within advanced high-strength steels. We don't have the capacity today. That will be another example. So and with that, I guess you're really entering a new product spectrum in that sense that you're basically entering the surface market in automotive, right? Not necessarily. No. Uh, but, but we are focused to stay within our niches with advanced high-strength steels and, and Q&T and there we see possibilities both for, for, as said with the example of Q&T, new grades and new gauges and widths, but, but also, uh, other parts where we are either <inaudible> producing today like galvanized advanced high strength steels or not being able to produce at all. Okay. And then, just to briefly explore <crosstalk>- So, so, so just to be, just to be clear. I mean we're not changing the strategy or the focus on, on niche products. That's still the foundation that will continue to be the foundation of SSAB. Yeah. No. I think that's very clear that you're pursuing that. Um, but just to explore briefly further, you, you mentioned strong demand and I guess we all were able to see a very strong demand from automotive, I guess those are, this is the segment which you are emphasizing, at the same time, obviously, at the moment automotive I would say relative to other C companies is under- underrepresented in your end market. Um, are you seeing that pool for fossil-free steel from other end market segments as well such as white goods or what- whatever? Yes. We see that from a lot of segments and segments that we are not active in today and segments that we will, where we will not be active, but we see it from heavy transport. We see it from other segments where we are active today. So I would say, <laugh> to be honest, we see it from most of the segments, uh, want to have fossil-free steel in the future with very few exceptions. Okay. Okay. Perfect. Thanks, Martin. And, and then, I have one follow-up question on CapEx. I'm sorry to come back on, on that, obviously, there have been a lot of questions around that already. Leena, uh, you were showing some charts on CapEx, I think on slide 22, and I guess before, you've always been talking about three, three and a half billion CapEx over the cycle as the rough guidance. To keep things simple and instead of talking about the key peak CapEx or nailing things down, uh, to one specific year, which is, which I appreciate is very difficult to do. What would be the new normal effective over the cycle CapEx for the rest of the decade which we should be picturing? And again, I, I'm conscious that may be subject to change because if electricity isn't there, the 45 billion will obviously be split maybe over a longer time spend and maybe there will be some funding, but what is the broad number we can work with versus the three to three and a half before? It's, it's a very good question and let's come back to that, because as we said, I mean we have the maintenance CapEx level today that will over time then in existing facilities go down. We have the Oxelosund conversion, which we have said will cost, uh, until 2026 roughly 5 billion. And then, we have this new program. So it will be a combination of that and it will be dependent on when we start, but, but for the coming years, you should expect us to, uh, move on with Oxelosund, and then gradually then start to invest in our Nordic mills, but at the same time, we will start to reduce, uh, maintenance CapEx and call it other strategic CapEx in, in, in those facilities. So let's come back to that with, with, when we move on with this, uh, feasibility study and have more clarity. But we have said a round figure of 45 including contingencies and, and in order not to disappoint anyone with that figure. Okay. Okay. Sounds good. Okay. At least, I tried my best. <laugh> Thank you so much. <crosstalk> and you tried on Leena's first meeting to see if you could- Yeah. uh, convince her to answer something <laugh> that you knew that you wouldn't get an answer from <inaudible>. So good try. <laugh> Okay. Thanks so much, all of it. Thank you. And our next question comes from the line of Andy Jones at UBS. Please, go ahead. Your line is open. Hi. Thanks for the, uh, thanks for the opportunity. My question is regarding priorities, because I guess, you know, the very low power costs in Northern Sweden throughout a huge advantage for making low cost sponge iron and clearly, you're dedicating a huge amount of capital to, to, you know, EAX and, and basically sorting out the steel facilities, but it doesn't leave a huge amount to potentially invest in HYBRIT, uh, going forward. Can you just talk a bit more about how you see the, the returns on producing sponge iron, uh, given the economics, the power costs and so forth that you see now compared to, you know, the investments that you're making here, because obviously the majority of the CO2 reduction comes from the, uh, you know, there's sponge iron part and, you know, that seems to be where the value is? So I'm quite surprised that the magnitude of the spending here compared to the focus on HYBRIT, and are you giving up an opportunity potentially to, to LKAB, who might wish to, who seem to want to accelerate this? Are you, you know, essentially losing some of the value of your, your location? Um, that's, that's quite a poor question, but <laugh> <crosstalk>- But, but, but what I'm trying to explain is that we will do this in a partnership in the, in, in the HY- HYBRIT partnership together with LKAB and, and Vattenfall. And I think, uh, it will be dependent on, on electricity prices. I think the good thing with this product is that we will also have hydrogen storage. So we can use, uh, wind power as an example. And then, store energies in, in, in, in the hydrogen storage. And then, produce, uh, sponge iron 24 / 7 regardless of, of peaks or, or troughs in, in electricity prices. So what I'm trying to say and, and let's come back to that, but we're trying together to optimize then, uh, a value chain. And then, exactly who will do what then, who will own what, we haven't really decided, uh, that, uh, we have the partnership, we are now investing or planning to start to invest in the demonstration plant. And then, we'll take it from there. <crosstalk> So, so we're talking about the full value, value chain together with LKAB, SSAB, Vattenfall, and then customers. So what we are trying to achieve is fossil-free products out that end users in a cost efficient way. Yeah. That makes, that makes sense. I guess I'm, I'm kind of asking, can you really afford to commit much more in terms of capital to HYBRIT given these huge CapEx investments for your planning here? Uh, that will of course depend on cash regeneration and so on, but, uh, now we are taking this decision and, and directional decision and we'll take, uh, the decisions one by one. But, but it goes together because, uh, we are now investing in a fossil-free value chain. Okay. And I think that is what is appreciated by the market and what the market wants to see. Yeah. Market- And I think the, the, the feasibility of doing that is, uh, better in the region and, and then we are in, then in other regions and with the knowledge and experience, we have, we are very well suited for this and we have a strong belief that this is the future, not maybe the full future, but this is what the market is asking for. No. I completely agree. And just to clarify something on the 45 billion, obviously, the capital intensity is a lot higher than the Oxelosund one clearly, because the scope is larger. Aside from just building EAX, could you just give us an idea for what other facilities are included in that 45? <crosstalk> For example, <crosstalk> No. Uh, it's complete mini-mills, uh, like, uh, I think Sinton in, in Texas is a good example. Completed, completely integrated mill starting with electric arc furnaces outcomes, uh, finished products of the rolling. So this is a complete mini-mill. Yes. In Oxelosund, we are closing the coke oven battery and the blast furnaces and moving over to electric arc furnaces, but we keep, uh, the steel shop, the rolling mill, because they are state-of-the-art and very well fitted for those kind of products. This, I mean you should compare it with <inaudible> or Sinton. Okay. Okay. But, okay. That's fine. That's great. Thank you. Thank you. And our next question comes from the line of Seth Rosenfeld out of Exane BNP Paribas. Please, go ahead. Your line is over. Good morning. Just one follow-up question, please. Um, I appreciate your comments earlier on the improved efficiency of the new capacity, better product mix, lower fixed costs, et cetera. Um, but in the past you've given an explicit figure for the higher operating costs of green steel. I believe they were 30% to 40% above traditional technologies. As you go forward and kind of dive into this at a broader scale, what's your confidence in the like, for like operating cost component? Um, I recognize there might be some other, other mitigating positives, but how do you think about the cost of production? What's your assumption around, for example, cost of that DRI substrate? Thank you. No. But, uh, we have been, become more and more sure about the cost and the efficiency and so on, and, and that has not increased over time when we have become more and more sure. I'm sorry. The cost inflation, you're more <crosstalk>- No. But, but, but might not know about the, the cost of producing, uh, steel like this is, uh, has not increased when we have gotten more and more educated. I would say the opposite. Okay. Can you confirm an updated expectation for how much your operating costs will increase like for like with the new technology? Uh, they would not increase. Okay. So compared to prior guidance of an over 30% increase, the new guidance is no increase? Uh, let's come back to that, but it is not a 30% increase, for sure. Okay. I think that's something that the market definitely wants more color on recognizing how much capital is being allocated to the shift in technology. And, and we need to come back to that when we, uh, come up with the FIDs and so on and take it mill by mill, but, but the operating costs will be, we will, we will be much more cost efficient. Okay. Thank you very much. Thank you. And we have one further person in the queue. That's, uh, Alan Spence of Jefferies. Please, go ahead. Your line is open. Thanks. Uh, I appreciate the opportunity to ask a couple of follow up questions. Um, the 5 billion Oxelosund conversion CapEx, can you just confirm how much that will be done by the end of 2022? And then, how the remaining will be split ' 23 to ' 25? I think for ' 22, it's around a billion. mm-hmm <affirmative>. A billion in 2022. That's the total amount for <crosstalk> Uh, for, for Oxelosund conversion. No. That's for the ' 22 year. Uh, for, for ' 22. And, and how much was spent in ' 21? I don't have the exact figure, but part of the cost is already occurred during, during ' 21. Yeah. Okay. And the second one is just on, um, the down, you know, the blast furnace re-aligns and new coke ovens for Lulea and Raahe, uh, were those scheduled to be done before 2030 or after 2030? I would say around 2030. Then, you can always flex, uh, sometimes you can prolong it a year and sometimes you need to do it a year earlier. So I would say around 2030 the two blast furnaces in Raahe. One of them slightly later and also, and Lulea in that region as well. So I would say around 2030 all the three of them. Okay. So but effectively within the timeline of the 45 billion? Yes. Not afterwards? Is that the correct way to think about it? Um, around that timeline. Uh, I, I say that around 2030, because it's not an exact science. You, you can sometimes you're lucky and you can run a blast furnace one more year than planned. Sometimes you're unlucky, you need to do it one year earlier. It depends so much of, of the wear and tear in the, uh, blast furnaces and also if you have, uh, had to stop them or not. So, so it is not an exact science, but, but, uh, around 2030 all the three, all three of them. Okay. Thank you. So the idea is to avoid that, of course. Thank you. And, and so, there are no further questions on the line at this time. I'll hand back to our speakers for the closing comments. Okay. Thank you. Thank you for all the interest. And by that, we close today's conference call and we wish you a pleasant day. Thank you. Thank you very much. Thank you."
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-    "transcription": "Hello, good afternoon or good morning, wherever you might be. Uh, welcome to the Lundin Energy Q4 2021, uh, Results and also the 2022, uh, Business Outlook and, and Budget for the year. Um, we'll run today, like a normal set of results. Actually, we, um, we'll have Nick Walker talk through the top line, some operational highlights, uh, and then we'll hand over to, to Dan Fitzgerald, he'll talk you through the operations, uh, and then over to Teitur Poulsen, he'll talk you through the financial performance for the year, uh, and an outlook into 2022. Um, after that, we'll be followed by the Q$A, and that we'll run it, uh, by the conference call line first Q&A, and then I'll host the calls from the web thereafter. So, uh, thanks for joining and I'll hand over to Nick Walker. He'll, he'll kick off the presentation. Thank you, Ed. And, uh, good afternoon, or, or good morning if you're joining us from north America, and it's great to have you all join our London Energies, uh, 2021, uh, results discussion and, uh, uh, 2022, uh, business outlook. Of course, given the transaction, we announced with Aker BP in December, the format today is naturally slightly different to our usual Capital Markets Day. And as Ed says, I'll, I'll give a, an overview and then, uh, give a, an insight into the, uh, the, Aker BP transaction. And, uh, and then we'll run through the agenda. And, of course, uh, as usual, uh, we'll give you the opportunities for answer your questions at the end. So, first of all, the key highlights for 2021. I'm really pleased to report, uh, uh, record production and record financial, uh, results for the full year. This is underpinned by continued, uh, excellent operating performance. And, of course, the strong oil and gas prices, uh, that we're enjoying, uh, today. You can see our world class assets continue to outperform, uh, full year production. You can see came in at 190,000 BOEs per day. That's top of the original guidance range. And we exited the year at just under 200,000 BOEs per day. All of our key projects are on track, uh, in the greater Edvard Grieg we delivered an infill drilling program, and we delivered two tieback projects to the facilities, Solveig and Rolvsnes, and all of those projects came in on budget and on schedule. And together with a number of new projects that being planned, we'll keep the facilities full in the long term. Johan Sverdrup Phase 2 remains firmly on schedule for first oil later this year, which will provide a big boost to our production, uh, as you'll see when Dan talks. And we have two projects in the Alvin area just started in the execution phase. We, again, grew the business with a resource replacement ratio last year of 200%. And I see more to come from continued growth in our world class assets. And I think Dan will give you a flavor for that when he talks. Our high quality cash generative business, uh, delivered record financial results, uh, you can see continuing industry leading low operating costs of $3.10 per BOE in the year. We generated record-free cashflow on the back of, uh, strong production performance and, uh, strong prices of 1.6 billion for the year. That's over three times, our annual dividends and results in us de-leveraging the business with net debt reduced to 2.7 billion at the year end. We're also making gate progress on our de-carbonization plan with the company set to be carbon neutral by 2023 from operational emissions. And I see this is a key value differentiator for Lundin Energy and supports our top quartile ESG ratings. And this is the foundation of our recent inclusion in the DAO Jones sustainability index for Europe. And I think this is a big deal. It's one of the biggest accolades you can get in relation to ESG. So in summary, we've delivered excellent results in 2021, and all of our key business priorities are on track. But also, at the end of last year, I was very pleased that we announced a transaction we're combining Lundin Energy's EMP business with Aker BP to create the leading European independent EMP company. And I'll talk about that in a few moments. But first, looking forward to what can you expect in 2022, you can see where guiding production of 180 to 200,000 BOEs per day. And that's consistent with what we've indicated previously with the main variable, uh, being the timing of the startup of Yon's Federal per phase two. As I've discussed, uh, we're set to be carbon neutral by the end of this year. And we continue to sustain low operating costs, uh, $3.60 per barrel is the guidance for this year. That's slightly above 2021 levels, but that's due to startup, uh, phase of Yon's Federal, but when we get to a full year of production on Yon's Federal phase two, then it drops down again in 2023. In terms of operational delivery, you'll see that Yon's Federal phase two comes online in the fourth quarter of the year, lifting capacity through the field to 755,000 barrels of oil per day gross. At Edvard Grieg, we expect to see three new project sanctions, uh, by the end of the year, supporting this long term production, uh, plateau extension and electrification of the facilities will start up, uh, later in the year. And this is a, of course, a key element to our decarbonization plan. And at the large Westin, uh, Field where we increased our interest last year to 35%, we will sanction, uh, that project development at the end of the year. And this provides material support to the long term production outlook for the business. And, of course, during the late year, we expect the transaction with Aker BP to complete around the middle of the year And on the back of that strong performance and the outlook for the business, and as we announced at the end of last year, uh, the board is recommending to the 20 22 AGM, a quarterly dividend increase by 25% from this year. So on an annual basis, that's $2.25, uh, $2.25 cents per share, which will be paid quarterly. Uh, this, uh, this is line with our dividend policy to grow shareholder returns, and this, uh, increased dividend level will remain payable until closure o- of the Aker BP transaction, transaction. And I now, uh, intend to run through a couple of slides, uh, that talk about the, the proposed Aker BP Lundin Energy combination. London energy is a track record of creating value for shareholders for, for over 20 years, which you can see, uh, shown in this slide. Uh, so since the company's inception, the share price has grown through, uh, three sect per share in 2001 to three, roughly 375 sect per share today, while also along a distributing around two and a half billion dollars, uh, through spinouts and dividends. And this represents a 28% compound annual average return, uh, every year for 20 years. However, the board has felt, uh, for a while that to prosper through the energy, transition that we need to build greater scale while retaining focus, being low cost and low carbon, which led to the process that we run during the second half of last year, resulting in this proposed transaction, where we announced in December to combine London Energies EMP business with Aker BP. And leaving Lundin Energy, uh, renewables business, which is positioned to grow. And I think this creates more value for shareholders that I think selling the renewable business with the EMP business, uh, uh, would, would've, uh, would, would not create that extra value. So I'm convinced this transaction, uh, will continue our path of, uh, creating value for shareholders. So focusing now on the details of the transaction, the proposed combination of Aker BP and Lundin Energy's, uh, EMP business, I think is a tremendous deal to combine these two great companies drawing on the best of both to make something even bigger and better. It creates a Norwegian pure play EMP company of scale production growth, low cost, and low carbon emissions that I think is set to prosper through the energy transition. It will be Europe's leading, uh, uh, independent EMP company, and one of the top independence in the world with a market cap of today around 23 billion and will be, uh, Norway's third ranked, listed company by value. I think it's a great deal where the value of the combined business is greater than the component parts. And I think in this set case, we can truly say one plus one, uh, is to more than two. And for the Lundin Energy shareholders, this will deliver significant upfront cash consideration of approximately 72 sect per share. That's around 20% of the value of the company, the opportunity to be a shareholder in the leading European EMP company. And you can see receiving point, a roughly point in 0.95, uh, Aker BP shares for every one, uh, Lundin Energy share you hold, and a retained interest in the new renewables business, uh, that is set for growth. And the combined business has the financial strength and cashflow profile to pay a growing and sustainable dividend into the next decade. Aker BP has announced a 14% increase in dividend for this year. And the combining group will pay an annual dividend of $1.90 per share post completion on a quarterly basis. And the intent that is that will grow thereafter by at least 5% per annum. And so I'm convinced that this combination proposal with Aker BP is a win-win outcome for both sets of shareholders. And I think in terms of the process moving forward on the transaction, uh, the Lundin Energy, uh, shareholders will be asked to vote on the transaction at our AGM at the end of March. Uh, and the Aker BP uh, shareholders will vote, uh, uh, early April. And then there's some necessary, uh, approvals, government approvals and petition authority approvals in Norway, which I, I think, um, I see as a formality, which will lead to closing of the transaction around the middle of the year. And this is what the combined company looks like. It will have reserved some resources of over 2.7 billion BOEs. Production today, uh, will be around 400,000 BOEs per day in 2022. And that will grow to over 525,000 BOEs per day in 2028. You can see industry leading low operating costs of less than $7 a barrel, an industry leading low carbon emissions of around one quarter, uh, of, of industry average, providing the combined entity the opportunity to continue, continue a progressive and market leading decarbonization strategy, which I think you will hear more about from Aker BP in that Q4 results. And also delivering sustainable and growing dividends. And this creates a company of scale, production growth, low cost, low carbon emissions, which as I say, I think will prosper through the energy transition. And for the remaining Lundin Energy business, this will be a new renewable company that we intend to grow. It has three high quality renewable assets in the Nordics, which when fully built out will produce 600 GW hours per annum net. This business will be debt free and with significant cash reserves complete the projects, and generating free cash flow from the end of 2023, and with the financial capacity to grow the business. We also intend to position this to pursue other opportunities and consider other opportunities through the energy transition. The business will remain listed on the Nasdaq Stockholm exchange. And I think this is a really a great opportunity to grow and create further significant value from this business. And we will outline what the business plan, the management board and governance details are gonna be for this on the 7th of March, so that you can understand the opportunity ahead of our AGM. So, that's is what I wanted to cover. So now I'm gonna hand over to Dan who will give you some more details on our operations. So over to you, Dan. Thank you, Nick. And it's a pleasure to be here presenting today what has been a, a phenomenal year of performance for Lundin and not withstanding the Aker BP transaction. A really exciting, um, outlook for 2022 with a lot of activity aimed at continuing to, to grow the business. And so, if we look across the, the operations and the assets that we have today, it's been another year of really good top tier operating performance. On Johan Sverdrup the excellent performance we've seen over the past 18 months, two years has continued, um, continued in the same fashion. And we're gonna touch a little bit later on where we see opportunities for resource or further resource growth in Johan Sverdrup. On Edvard Grieg we've seen a reserves upgrade, uh, of around 40 million barrels this year, which is more than we produced from the area in 2021. And that, that comes from not only the Edvard Grieg field, but starting to see some of the upsides in the tiebacks. And so we'll, we'll delve into those a little bit more and the activities that we have to continue that growth into the future. We have five new projects moving towards sanction this year, and that, that corresponds to net resources of around 240 million barrels that we're aiming to mature towards the reserves at the end of the year. And each of those projects has an exciting potential to, to continue to grow beyond what we put forward in, in these project sanctions. If we look at the, the resource replacement, we've added two barrels for every barrel we, we produced in 2021, and that comes primarily from the Westin acquisition we announced at the end of last year. Growth in the Edvard Grieg area, and the, the subsea tiebacks to Edvard Grieg as well. And that corresponds to 140 million barrels of 2P plus 2C re- resource editions in 2021. And the operating performance of the assets really has been world class. We've been at 98% on Edvard Grieg Johan Sverdrup and 95 on Alvheim, which really is world class performance from all of these assets. And something you'll see, which is unparalleled in the industry when you look broadly across not only Norway, but the wider industry. And we've done that at an all in cost of $3.10 per barrel, that to us OPEX and a carbon intensity of less than three kilograms of CO2 per barrel, which is really world class operating performance. Nick touched quickly on our production in 2021. And we, we finished the year above the top end of our original guidance range at just over 190,000 barrels of oil equivalent per day. And you see here the growth towards the tail end of the year with 194 in Q3 and 195 in Q4 and December finished just shy of 200,000 barrels per day. And the outperformance in 2021 really was due to Edvard Grieg and a little bit from Johan Sverdrup, really high production efficiency on both assets. And we saw some increased capacity available on Edvard Grieg, which we took advantage of towards the tail end of the year. And that puts us in a position where now for six and a half, the company has been delivering at or above the midpoint of its production guidance range, which is, which is really an, an outstanding achievement, um, all considered. If we look forward towards 2022, and this year, we've given guidance of 180,000 to 200, 000 barrels of oil equivalent per day. And that range is really driven by two main themes of activities. In Q2, we'll see turnarounds planned outages on Johan Sverdrup, which will be the hookup and commissioning of the Phase 2 platform, which will have been lifted late in Q1 of this year. Edvard Grieg has a planned maintenance turnaround as well in Q2. And then in Q4, we see the startup of Johan Sverdrup Phase 2, and that really drives the opening and increasing of our guidance range towards the end of the year. And there's some, some flex in that range in the low side, we see it start later in Q4. And in the high side, we see it starting in the early part of Q4. And so, the, the external guidance for Johan Sverdrup is firmly on track for Q4. And we see a range of outcomes possible in our external guidance for this year, sorry. And all of that will be completed with operating costs still in our long term guidance range of between $3 and $4 per barrel. And we maintain that range as we look forward with a another year behind us. 2021, our outturn on the year was around just over 10 cents higher than what we expected at $3.10, still industry leading levels, but were impacted towards the tail end of the year by increased carbon prices and increased electricity prices. As we move into 2022, we're guiding at $3.60 per BOE, and that takes into account the fact that we have increased costs in Johan Sverdrup, and we don't benefit from all of the production upside we see getting phase two online. We also see an increase in, in carbon price pricing and electricity pricing, which is taken into account in this guidance. As we roll then into 2023, and we see a full year of production impact from Johan Sverdrup Phase 2, we'll see our operating costs reduce back to our long term average of between three and four and down at the lower end of that range while we remain on plateau for Johan Sverdrup. So all in all, we, we remain industry leading on operating costs, and we expect to, to maintain that guidance going forwards. Our carbon neutral promise still stands firm, and we are now less than 12 months away from being carbon neutral on our operations. And the three key pillars we have driving that carbon neutrality is firstly, powering our assets from shore. Secondly, powering them by renewable assets, which we've invested in, and third natural carbon capture projects. And on the electrification\u2026 In natural carbon capture projects. And on the electrification, we expect to see this online in Q-4 of this year, when Edvard Grieg and Johan Sverdrup-phase two, are both powered from shore. And once we see phase two online, then we'll see Edvard Grieg um, powered from, from shore through, through the P-two platform. Our renewable projects are progressing well, and by the end of next year, all three of the projects will be fully online. Today, Like Hangar is fully online, which is a hydropower plant in-in Norway. M-L-K: we have around half the turbines generating power. About three quarters of them are fully commissioned, and nearly all of them by one uh, are fully constructed, and so we are slightly delayed from our original plan of end of last year, but we expect to see M-L-K fully online, and handed over towards the tail end of Q-1 this year. Then we move into Sweden, with our Cast Groove project, and that will be online towards the tail end of 2023, and-and the activities project-activities have already commenced on Cast Groove. And then our natural carbon capture projects, once we complete those first two pillars, there's a small amount of remaining emissions, and our natural carbon capture projects are firmly on track. We've planted around half a million trees to date, we have-just shy, of three million being planted this year, and a total of eight million trees being planted, which will capture the residual emissions from our business. And as we move forward, Nick touched on this a little bit; Aker BP will acquire the assets and will pick up all of the electrification projects and assets. They will also pick up the natural carbon capture projects with the renewables staying behind in-in Lundin Energies Renewables Company. And uh, Aker BP are going to communicate a little more on this when they come out and speak to the markets later, in their Q-4 results. Then if we start to look through some of the key assets across our portfolio, Johan Sverdrup really has had another year of world class delivery. We've seen emissions from a, from the Johan Sverdrup asset at significantly lower than 0.1 kilograms of CO2 per barrel. Operating costs: down at less than $2 a barrel, with extremely high production efficiency, and a credit to all of the teams involved in making this performance happen. This-this will continue with Phase Two coming on stream, and we see some of the benefits of that; not only on Johan Sverdrup, but in the whole Sierra high region with the power from shore infrastructure coming on, and so we expect to see this performance continuing on Johan Sverdrup. If we look at the opportunities for resource growth, and we-we open this door a little bit, at the end of last year, where, we're now looking\u2026 now that we have more production data from phase one, we're looking for opportunities on how we can continue to grow, the Johan Sverdrup field, and how we can a-realize some of the key things that were-key themes that we see as-as upside in Johan Sverdrup. The first one that we-we touched on in our reserves announcement, and today in our um, guidance announcement, is on acceleration. And so, this year we've put a range of infill wells into our 2-P reserves. And we see a lot more potential in the field for infill drilling, and bringing forward some of the tail end resources from Johan Sverdrup. And this field has an extremely long tail and a\u2026 a lot of volumes which can be recovered over its entire field life. If we're able to take some of those volumes and move them forward, extending plateau, and arresting the decline are two opportunities where we can see significant potential. and we're doing pieces of work to try and identify and understand what that potential looks like. Secondly, there's some constraints around some of the um, facilities capacity and reservoir management that we're trying to understand and investigate here. And especially around water handling and water injection, we see some significant upside there.And finally, you can see here the development so far has been concentrated in the field center. And we still see significant opportunity and uncertainty around the outside, and the flanks of the field, where there's opportunity for further understanding, potentially increased thickness of the reservoir, and further to that further development, which could see some of those volumes being produced. So with all three of these acceleration through infill drilling, and improvement in capacity and further understanding and development of the flanks of the field, we see significant running room in Johan Sverdrup. And that, in the fullness of time, will be able to share more details of what that looks like. The Phase Two project on Johan Sverdrup is firmly on schedule for Q-4 of this year. We're around 70% Complete now. We've started drilling on some of the satellite areas, and the P-2 processing platform will be installed in-in late Q-1 of this year, with the hook up and commissioning in Q-2. And the project teams are doing a phenomenal job a-at managing it. All of the risks and uncertainties with this project, not withstanding COVID Over the last two years, and being able to keep this project firmly on the track. And not only on track, on schedule, we're- we're on cost as well. So, we still sit with costs in line with the PTO estimate for phase two. Moving now, on to the greater Edvard Grieg area. And this really is a core area for Lundin Energy, and one where we've seen significant growth and significant upside. And there's still a significant amount of activity in this region. We started with Edvard Grieg, at 196 million barrels of 2-P reserves, when we sanctioned the project. And now in the greater area, we see that growing to 450. If we include the upsides, and some potential exploration success, we could be between 600 and 800 million barrels of-of reserves and resources in this area, which is over four times what we started with. And Edvard Grieg itself, is performing well. We've seen out performance reserves increase. Solveig has grown over the years; this year, As well. we see reserves increased because of the-the results of drilling. And we've got three projects in the area of further development on Solveig roughness for field and Lille Prinsen into the north, where we see future potential, to grow in the Edvard Grieg area.Edvard Grieg itself, we announced uh, just shy of 30 million barrels, increase in the 2-P reserves from Edvard Grieg. And you can see in the bottom left here, how much this has grown since P-D-O. 186 million barrels is now just shy of 380. And we still have upsides to continue to grow that. And where we see upsides, we completed the um, infill wells this year on schedule; on budget. And the-the productivity from two of these wells with the fish bones is significantly higher, than what we expected to see. And so, we see further potential to deploy the fish bones more towards the eastern flanks of the field, and the Eastern core of the field, where we have slightly poorer reservoir quality. And that's where we see the real benefit of these Fish bone completions, by increasing productivity. We drilled for the first time, production wells, into the Jorvic high; in the Jorvic basin. And we see further running room, which we'll understand a little bit more through um, through the production performance of the wells. In the northern area. We have two wells already producing from the Tellus area, where we see a very small layer of-of Asgard sand sitting above basement. And those two wells in the North, have seen a really good charge from the basement into this thin sand, giving us good production performance. And so, we'll talk in a slide or two, around the whole basement potential in the region. But already, we have wells on production in the basement. In your Jorvic and in Tellus we have further opportunity in-in the field to f-to explore what the basement potential could be, on top of where this Asgard sand will sit in those regions. On top of that, we have further infill drilling planned in the\u2026 in the core of the field as well. So although we've already seen significant resource growth in Edvard Grieg, I don't think we're yet finished with Edvard Grieg.In Solveig, we started this field in Q-3 of 2021. And we've seen an increase in reservoir properties due to the\u2026 the results of the drilling campaign on Solveig, and so that drives the increase of 11 million barrels, to our 2-P reserves. We're now getting ready for a phase two development, which you'll take into account, the de segment discovery we-we made last year, and there's a well towards the northeast of the field. And in the southwest, you see two wells in the SYN rift section. And so, we'll be maturing this project through towards P-D-O. And we're looking at opportunities. We see segment A there, we're looking at opportunities to further explore and expand Solveig to continue this growth story. And finally, on the Edvard Grieg area, a little bit around Lille Prinsen in the regional basement potential in Rolvsnes. So, in-in Rolvsnes if we start in the South of this, Rolvsnes has a resource potential of between 14 and 78 million barrels of-of resources. We have the extended well test, which we started up last year. And this well tests aims to prove a number of things in the basement: One, that we have productivity over a long period of time. And two, to that we-we have a water cut development that\u2026 that allows for a full field development. And so, the stability of the water cut development is key, to ensure that the fractured and weathered basement continues to contribute to a well, over a long period of time. And we see matrix flow, not only fracture flow, where we see water coming up from-from underneath the field. And what we've seen in-in Rolvsnes, is our water cut is stabilizing around 45% -50%. And the key thing is that there's stability in the\u2026 in the water cup development, means we're seeing a lot more contribution from the weathered basement, and a lot more contribution from the matrix. And so because we're starting to see this-this water cut stabilize; it suggests that we've got a significant running room on Rolvsnes to continue with a full field development. And I think what you'll see on that development, is a phase development where, where we take small steps to further understand the resource potential. And so if we take that knowledge on the basement and step up to Lille Prinsen. last year, we completed a transaction with Equinor to acquire an extra 20%, and take operatorship of Lille Prinsen, and then we drilled a suite of-of exploration appraisal wells this year. And what we've found is some good quality sands in Lille Prinsen, but we've also found basement potential below. And so, what you see here in-in the resource range is primarily the good quality sands, with a small amount of basement potential. But what we found in that basement is we have three times the thickness, or up to three times the thickness of what we do in-in Rolvsnes. And we also have um, the oil in Lille Prinsen is the same as Edvard Greig, and roughly in pressure communication, potentially through the aquifer. So you have this basement potential that extends from Rolvsnes all the way up to Lille Prinsen. And we have the ability to go and phase the development in Lille Prinsen, as well, to test some of this basement potential on top of the base. And so if we put our arms around all of that, there's potentially up to 300 million barrels of gross potential in this area, due to basement alone, on top of what we have in um, in the field and the non basement potential. And so, we'll be spending a little bit more time this year with both the P-D-O's, and the understanding in the area, to try and explore what further potential we have in-in the regional basement in-in the Utsira High. Stepping out of the Utsira High, into Wisting, this will become a new core production area for Lundin Energy, and as N-Nick touched on earlier, it's a really strategic acquisition for us, that adds long life resources into a window where-where we're looking for that growth. And so we remain firmly on track with engineering, and the work required to submit the P-D-O at the end of this year. And we've also been awarded a further license in the latest app around and we'll take a-a 35% working interest in all of the acreage around Westing and operatorship of the exploration phase. And there's running room of up to 500 million barrels as identified today, on that exploration potential. And we'll be working with Equinor, the operator, to mature that forward. So, really exciting area. I think there's more to hear, regarding Wisting, as we move forward. in the Alfheimer area, the-the fantastic work, that I could, BP, have been doing in Alfheime, really continues. We see new projects Cumper East\u2026 and Cumper East Gecko and Frost was sanctioned last year, and they're moving into the execution phase, and we should see Trellentrein moving through the same process this year. And those material additions add significant volumes, but also significant production into the profile for-for the Alfheimer area, and I think that will continue into the future. Looking at the future growth potential, we have three projects in execution, just now. Cake Frosk and Johan Sverdrup, phase two. And then five more progressing to P-D-O. And those five, represent 240 million barrels net resource. And so that\u2026 that project is our short to medium term production growth, and then we have a remaining program of five VNA wells in 2022, targeting around 140 million barrels. And so, we'll see those being drilled through the course of the year, And then we have a material program ongoing with still, around 100 licenses in Norway, and an exciting program for 2023 and beyond, as well. My final two slides looking at reserves, resources, and production; on the reserves and resources position, We touched on the 200% Resource replacement ratio, for 2021. And that-that's made up of primarily Wisting, Edvard Grieg, and Solveig. And so, if we look at the reconciliation of our 2-P reserves of 2-C resources, we see the production of 71 million barrels, we see Edvard Grieg and Solveig, 2-P reserve additions of 39, corresponding to around 55% reserve replacement ratio. And then we see the Wisting transaction coming in, less some of the-the stranded assets in the balance, which we took off the books at the end of last year. And all of that together, points towards a strong resource replacement ratio; two barrels added for every barrel produced, and over a billion B-O-E's of 2-P resources, and 2\u2026 sorry, 2-C resources and 2-P reserves. And then, my final slide before I hand over to Tighter is our long term production outlook. And we've shared this for the last few years, that CMD and year on year we see that the 2_P reserves position continues to increase. And so, you can see on here in the dark blue bars, our current 2-P reserves position. And you see in the red line, what the 2-P reserves were at the year end 2020, So 12 months ago. And you see nearly every year, an increase. And our role as a-as a technical management team, is to turn some of the 3-P and up sides. into 2-P reserves over time. And I think you've seen our track record of doing that, year after year. And you see the potential in our asset base, to continue to do that over time. And so we all believe that-that that a\u2026 that 3-P and up sides will continue to be added into the 2-P, and new opportunities will come on top of that. And so our production growth outlook is greater than 200 by 2023. And significantly more as you can see here, and where we will sustain that greater than 200 With this pipeline of projects and new opportunities. And so it's been a fantastic year, in 2021. Really strong performance across all of the assets. And I think there's a really exciting portfolio for this year to continue. And putting this portfolio together with Aker BP, as Nick touched on, creates one of the world's oil, certainly Europe's leading, and one of the world's leading low cost low carbon companies, with significant growth into the future. And with that, I'll pass over to Tighter. Okay, thanks Stan, for that, and Good afternoon, everybody, uh, or good morning, depending on where you are. So we're not going to go through Q-4 financial numbers, which again are going to show a very strong quarterly performance, and we're also touching on the full year results for the company. And then towards the end, we will give a brief guidance on the 2022 numbers, as we see them. And just a-a comment on the accounting implications from the announced deal with Aker BP, whereby we combine our EMP business with Aker BP. What that means is that from the fourth quarter onward, we will present all the numbers relating to the EMP businesses, as discontinued operations in our consolidated income statement. And similarly on loan consolidated balance sheet, we will present the liabilities and assets associated with the business's assets and liabilities held for-for distribution. But in terms of the numbers we're presenting here today, you will see everything as normal, as we are combining discontinued and continuous operation together into one financial metric. So starting off with-with the key highlights for-for the fourth quarter, and also Q-4 and the for the full year and Q-4. As we announced, ahead of releases, that we have had a lower lift in the fourth quarter. So the sales volume is 199,000 B-U-E per day. And understand the number that drives all the financial numbers we're reporting for the quarter. And similarly, for the full year we were also over the last basis by around about, 6000 miles on 96,000 BUE per day, in terms of salt, uh, volume. Uh, strong price, oil prices have been very-very strong, similar to-to gas prices. Uh, $77 A barrel for the crude oil result, in the fourth quarter, and actually over $200 A barrel in BUE terms for gas, around about $34 per-per MCF. Obviously the gas, uh, market in-in Europe, has been valid advertised to be extremely tight, and that's certainly shown true in our realized um gas, uh, gas prices. Cost, we've been through those to some degree, but $3.81 per barrel, for the fourth uh, quarter. And we had oil and gas investments of, just over $230 million. And also, we-we completed the listing acquisition in the fourth quarter, so that led to a $320 million uh, cash consideration to, uh, only four to 25% we acquired. Oh, in the four to 25% we acquired. In terms of cash generation for the full year, you can see on the top right here, EBITDA generation of over $4.8 billion for the full year and cash flows from our operating activities over $3 billion. And then generating free cash flow of $1.6 billion for the, for the full year. And that delivered the deck position of the company down to just over $2.6, $2.7, uh, billion. And as Nick mentioned, we are again increasing dividends. That was the, uh, uh, criteria we set out when we started off paying dividends in 2018 and we've essentially increased dividends in line with financial ordinance over that period, except for the year 2020 when we had the COVID impact. But again, our material increase in dividend proposed to the inaudible this year of 25%, which equates to just over 56 cents per quarter, in quarterly dividend payments. If we then look at some of the key financial metrics that we normally report on as we go through the year. Starting off with, uh, EBITDA at $1.46 billion for the quarter. That's generated off revenue of $1.55 billion. And as you can see in the top right corner, very strong sales price for the quarter, $84 per BOE. Obviously, as I mentioned, the- the gas inaudible gas prices is pulling up the BOE number quite significantly. So, 94% up on the same quarter last year. And also to say this volume's up 18.3 million barrels, up 6%, uh, on the same quarter last year. The cash flows from operation in the fourth quarter came in just below $560 million. In the fourth quarter, uh, we always have a higher tax installment in Norway given how the defacing of tax installments works. So, we've paid $710 million in- in cash taxes, uh, in the quarter. And in addition, we also had to work on capital build of, uh, over $140 million, given to continue the strong oil price performance as we went through, uh, through the year. So, also CFFO is up more than double on- on the, on the period, same period last year. Uh, free cash flow, uh, before dividend payments, uh, $22 million and that was also impacted by- by the settlement of the inaudible acquisition of the $320 million. So, we had all in, uh, investment levels of, uh, $530 million in the quarter. And then in terms of adjusted net results, uh, $293 million for the- for the fourth quarter. But on the face of the income statement, if you combine discontinued and continued operation, we came in at $122 million. Again, the- the inaudible acquisition with the Aker BP has led to certain one-off, uh, financial items which we normally just, uh, move through equity, is now having to be charged to the income statement. Such as, FX and interest rates flops which are now all deemed ineffective given the- the transaction we have announced. So, that movement normally went to equity where it's now going forward, that- that will be, uh, fully charged to the- to the income statement. And then a similar outlook for the- for the full year. Uh, we generated $5.1 billion of revenue for the full year. So that led, as I said, to EBITDA of $4.8 billion and at our Q3 numbers, we actually guided EBITDA, full year EBITDA between 4.8 and 4.9, so we came roughly in, uh, in at the middle of that, uh, guidance. And then CFFO came in, as I said, just above $3 billion. That then includes, uh, cash tax payments for the full year of $1.4 billion. And also, uh, our capital build for the full year of, uh, $230 million. So, very strong cash flow generation and more than doubling from the, uh, from 2020, uh, numbers. And as Nick said, free cash flow from operation, uh, free cash flow, uh, before dividend payments at $1.6 billion for the full year. That's actually covering dividends 3.5 times, uh, the cash dividend we paid out over the- over the last year. And then, adjusted net results just below $800 million when we take out the non cash effects, impacts we have on- on- on numbers. And on the face of the income statement, we- we have reported just below $500 million in net profit, uh, for the full year. Just touching a bit more in detail on our realized crude prices as we've gone through the year. You can see on the chart to the right here that we are showing, uh, the timing difference, which is the orange bar, on the average Dated Brent for each quarter. And you can see in the first half of the year, the timing of our lifting led to us actually outperforming on realized prices, half a dollar in the first quarter and $1 in the second. But you can see that trend then reversing in Q3, Q4, particularly in Q4, you can see on the chart to the left we had a high lifted volume in December just as the Dated Brent was dropping. And that's therefore led to a timing difference of $1.70 for the fourth quarter. A negative impact on our realized prices. And the red bars you see here are then the- the- the differentials, uh, to the- to the Dated Brent. And we've sold between half a dollar to $2 differentials in each of these quarters. But it's been- been a very busy year for our crew though. Our marketing department, we sold close to 100 cargoes for the year. So, almost 2 cargoes per week, eh, so the team here in Geneva's done a great job in inaudible marketing and then selling all these- all these cargoes. And on gas- gas prices, it's been very much an increasing trend as we've gone through- through the year. And actually in- in December alone, we realized the $240 barrel per BOE equivalent and- and- and realized gas prices. So, a very strong macro environment here on- on gas sales. In Europe, we're selling both into- into the UK market and into the Dutch, uh, gas market on- on pricing ahead. And of course, importantly, whenever inaudible will be fully electrified at the end of this year, our gas sales volume will obviously, uh, increase since we're not gonna burn any gas on the gas turbines on inaudible. So, that will lead to even further revenues from our gas production when we look into 2023 and- and beyond. Then looking at, uh, at operating costs and EBITDA margin, uh, we continue to very much have industry-leading unit operating costs out there which is leading to an exceptionally high EBITDA margin. You can see here 94% in Q4 and in fact it's been right around 94% over the last, uh, five quarters. On the chart to the- to the left, you can see there was a little bit of an optic in- in unit OPEX, uh, for fourth quarter. And Dan touched on this already, but you can see at the bottom of the bars here you can see the actual impact from higher electricity prices and also higher CO2 prices. Both of those prices increased roughly 50% from Q3 to Q4, uh, so that's what's leading to a somewhat higher, uh, unit OPEX also combined with a somewhat stronger Norwegian kroner compared to previous quarters. So, all then that just pushed the unit OPEX to $3.81 but nevertheless still extremely low and for the full year, as Dan said, we came in at, uh, $3.10, uh, for- for the year as average. Then looking at, uh, tax. The top two, uh, charts show, uh, the Q4 effective tax rate on the face of the income statement of, uh, 89%. But if you then again adjust for the non cash inaudible, uh, financial items, uh, which have very little tax, uh, impact for us, then you can see we get to, uh, 79% effective tax rate which is very much in line with what you would expect, uh, given that we operate in Norway where you have a 78%, uh, uh, effective, uh, tax rate. And then the chart on the bottom here shows you the phasing of our cash tax installments. As I mentioned, in Q4 we had a significantly higher tax installment given that you make two tax installments in- in that quarter. So, $711 million installed in Q4. And if you sum up all- all of the quarter last year, we paid $1.4 billion. But you also see on our balance sheet that we have, uh, uh, a tax liability\u2026 current tax liability of close to $1.6 billion. And that's then the cash tax, uh, catch-up payment we have to make in first half this year to fully settle the 2021, uh, tax due. So, you can see we have already locked in these tax installments of, uh, $510 million in Q1 and just over a billion dollars in Q2, based on the year end effects rate of 8.8 NOK to- to the dollar. Uh, so those are the locked in tax installments we already know we have to make in Q1 and Q2. Then looking at the full year, cash generation for the business which, as I said, was very strong. The CFFO organic, CFFO before we adjust for the working capital came in at close to $2.3 billion and after working capital $2.58 billion. We have total investments during the year of one- just over $1.4 billion, roundabout $300 million relates to E&A and $320 million relates to the inaudible acquisition. And then the delta is split roughly a third, a third, a third for inaudible but some smaller items also on the, uh, on the inaudible. So, that's how we define the free cash flow before dividends on $1.6 billion for the full year. And you can see here the total dividend payment of $455 million and debt reduction close to $800 million which therefore gave us a cash build of $370 million, so we're exiting 2021 with a cash tax, sorry, a cash balance of $450 million. In terms of debt position and liquidity headroom for the- for the company, at year end we had cross debt of, uh, $3.2 billion which consists of bonds amounting to $2 billion and term long spread of three, four and five year maturities, eh, of $1.2 billion, in total 3.2. And as I said around we have, uh, cash of just below half a billion dollars leaving the net debt of $ 2.7 billion. In terms of available liquidity for the- for the group, we have, uh, an inaudible of $1.5 billion. So, in addition to the cash we are holding, we have in total right about $2 billion of- of liquidity headroom as of year end, uh, 2021. If you now turn into, uh, guidance for 2022 and what I should emphasize here is this guidance is, uh, is provided on inaudible on a stand alone basis as if the Aker BP combination is, is not happening. Uh, but as I said in my introduction, from now up to closing we will continue to report the MP business as discontinued operations so- so the numbers here are- are- are essentially, uh, reflecting, uh, no deal happening at all and the year would be as a normal EMP year for us. So, the guidance here, uh, the key highlights are as I said earlier, the dividend of $2.25 per share and that will be proposed to the inaudible in 2022. And we will then commence our quarterly dividends as normal until the- the deal with Aker BP, uh, completes. The CFO guidance we are giving here is between $1.3 to $2.1 billion for the full year. Eh, and that's on an oil price range between $65 to $85 Dated Brent average for the- for the full year. And on the midpoint of the, uh, price bracket we give which is $75 Brent, we anticipate to generate free cash flow after dividend payments for the year. So, that'll reduce net debt EBITDA to roughly 0.5 times the ratio at year end 2022. We've been through the- been through the OPEX guidance and the inaudible analysis this morning. The oil and gas investment is estimated to amount to $760 million and then renewable and natural carbon capture projects amounting to roundabout $70 million. And then running through the- the details of the guidance as we normally do, so if we focus on the mid column here which is our base case, planning assumption on- on- on oil price in 2022, $75 and inaudible a term in gas price, that'll then generate a revenue per barrel of $76.70 which is $5.3 billion in- in absolute revenue, giving a cash margin of $5.1 billion or around about $73 a barrel. Eh, and an EBITDA net back of $72.40 per- per barrel, or just above $5 billion in EBITDA generation, based on our midpoint scenario $75 Brent. And then in terms of, uh, P&L impact, uh, as I said the cash, uh, margin $73 a barrel. We have the inaudible charge of just below $11 a barrel which is slightly above the depletion we run with in 2021. And the G&A is running as usual at the very low rate, uh, of 60 cents per produced for the year. And then financial items which includes, uh, income from joint ventures which are our renewable projects in Finland and Leikanger in Norway, amounting to $2 a barrel. So, given those profits before tax, just below $60 a barrel. And then the tax charge roundabout $47 a barrel, giving us net after-tax profit of $12 a barrel. And you can see here the current tax is a percentage of, uh, of the EBITDA generation and- and the midpoint oil price scenario 61%. And that will equate to roughly, uh, just over $3 billion in current tax for the year 2022. And that tax calculation is based on the proposed new tax legislation in Norway which is going through Parliament soon but hasn't been ratified as- as yet. But the numbers are based on that it, uh, that it will be. And then the- the last, uh, slide on- on the net inaudible guidance for us, uh, here. This is the cash flows from operation for the- for 2022 and we are sitting, as I said, between $1.3 billion at the $65 case up to $2.1 billion in the $85 case. And in this year we will have the cash tax payments will actually mirror, to a large degree, the current tax that we will charge to the income statement given that we have, uh, $1.6 billion catch-up cash tax payment to make this year relating to the 2021, uh, tax bill. And you can see here all the capital items are amounting up to $12 a barrel or roundabout $830 million, so that will therefore give us a free cash flow available for dividends of, uh, between $6.8 to $18.3 a barrel. So, certainly in the $75 and $85 cases you can see that we are more than funding the dividend payments we are proposing and in the $65 case we are slightly drawing on that to fund the dividend to the tune of $140 million. But the bottom line here is that it's- it's, uh, it's a low OPEX business and it's also very low CapEx intensity business. inaudible CapEx to grow production further is only $12 a barrel, uh, for the full year. And if we then look out in time, uh, and focus on the Capex profile we have\u2026 If we focus on the two people's firm which is essentially our two inaudible plus inaudible and some of the projects in the inaudible area. Uh, you can see this year, as we guided this morning $520 million this year and- and a similar level next year and then when inaudible expenditures start to wrap up, you can see that we are rounding it out about $700 million per year for out to 2026. So, it'll continue to be a business with relatively low Capex intensity as we look out in- in time. And then the lighter blue bars here are the- are the growth projects that Dan talked about mainly relating to inaudible expenditures in- in 2024. The majority of this spend would relate to- to inaudible and then in- in 2025 you have a roughly 50-50 split between inaudible phase 2 in terms of development expenditure. And my final slide before I hand back to, uh, uh, Nick, is just a quick summary of the guidance we have set out in our press release this morning. So, 180 to 200,000 BOE per day for the full year guidance and all our numbers in terms of net back guidance was based on the midpoint of this, 190,000 BOE per day for the full year. We've been through the OPEX which is slightly up $3.60 for this year but dropping down to $3.10 again in 2023, when we have a full year worth of phase 2 inaudible. 23 when we have a full year worth of, uh, phase two inaudible group. Uh, contribution and the capital items that we went through earlier amounting to 830 million dollars, including renewables and carbon capture, uh, expenditure and some decommissioning costs. So with that, I will hand back to Nick with some concluding remarks. Well, thanks, uh, Dan and Titer. I've just got one final slide, uh, before we open up for questions. I, I just want to leave you with these, uh, three, uh, key messages. First, uh, we delivered record operational and record financial results, uh, in the year, uh, support, uh, increased dividend proposal to the AGM. Secondly, uh, the proposed combination of Lundin Energy's EMP business and AKA BP, uh, creates a, a leading European independent EMP company, which I'm convinced is a win-win outcome for both sets of shareholders. And, uh, and it's expected that that transaction will complete around the middle of this year. And then thirdly, the remaining Lundin Energy is a new renewable energy business positioned for growth. And we'll let you, but we'll provide you more details about that and the strategy for that business in early March so you can understand the opportunity. So those are our full year 2021 results and, uh, outlook for this year. Uh, thanks for your time. Uh, and we'd now like to open up the call for your questions, and I think Ed is going to run that process for us. Thanks very much, Nick. Yeah. Uh, Mark we'll open up for questions from your, uh, conference call line first and then, um, and then you can hand back to me and I'll see if there's any from the, the web. So over to you mark. Thank you. Uh, to the callers on the phones, if you do wish to ask a question, please dial 01 on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find your question is answered before it's your time to speak, you can dial 02 to cancel. So once again, that's 01 for ask question or 02, if you need to cancel. Our first question comes from the line of inaudible of Morgan Stanley. Please go ahead your line open. Hi, uh, thanks for taking my questions. Uh, I had two please. Uh, the first was related to the, the 2022 to 2026 CapEx guidance. And if I were to compare today's guidance with the one presented in last year's capital markets day, it appears, uh, there is a significant increase in the underlying CapEx levels. And here I'm comparing the CapEx required for the two P reserves, uh, with last year's total CapEx projections. Uh, if you could let, uh, let us know the key reasons for the increase. Uh, you mentioned CapEx for inaudible and, uh, inaudible. Is that the only reason for the increase or are there other, uh, reasons as well? Also, if you could reconfirm, uh, again, uh, the CapEx guidance for the discovered and the contingent resource upside, uh, that, that is primarily for the visiting development, I suppose. Uh, the second question, uh, was regarding the, the comment made, uh, on the reduction of the two C contingent resource base, uh, that was, uh, uh, related to the, uh, standard assets in the inaudible. I was just wondering if they could pro- provide more, uh, details on what these resources were, if there were any key discoveries, uh, that you had previously highlighted, uh, that would be helpful. Thanks. Titer do you want to get the first one and, uh, maybe Dan the second? Yeap. Yeah, I can on, on, on the CapEx guidance. So what we call two P plus firm includes obviously all our, our two P reserves and the bulk of that remaining expenditure really relates to, uh, the build out of inaudible phase two. But what we call firm here is the majority of that is, uh, is the visiting development, which is a material CapEx project, obviously up in the, up in the Baron C. When we guided last year, we only had 10% of this thing in our numbers, whereas, with the acquisition with OMB this year, that number is now 35%, uh, equity in the visiting development. And, and from 2024 onwards, the, the bulk of the two P plus firm really relates to the visiting, the building out of the visiting development. So that is the, the answer to that. And I think on the Baron C assets, the, the small discoveries are <unk>, small 10 to 20 million barrel gas or small oil stranded assets. So nothing of any materiality in the Barons. Great. Thank you very much. Thank you. Our next question comes from the line of Yohan Sean Po of inaudible. Please go ahead, your line is open. Yes. Good afternoon, everyone. Uh, thank you to Titer to provide, uh, that much familiarity on the financial section of the presentation. I would like to come back onto this, uh, slide showing the CapEx profile. Um, interesting to know is that it's possible to understand, uh, all much, uh, of, uh, wasting project, uh, is shown here. Because of course, as you said, inaudible will only start to impact CapEx from 2024 onwards. First all as we speak or the project has yet to be sanctioned is slightly, slightly, sorry for 2028. So on this slide, basically, what is the share, uh, of the full, um, CapEx associated with listings that is shown? Um, and then the second question will be, uh, trying to come back onto some, uh, content to use, to, uh, uh, provide to the investment committee, that was your, uh, free cash or breakeven, uh, sort of level, uh, over the midterm. Are you able to provide any color on this, on your EMP portfolio indeed, uh, over the midterm or sort of, uh, free cash or breakeven we should sort of have in mind. And then the final question is in relation to the portfolio or the inventory of resources that could be CNFID by the end of, uh, this year to benefit from tax relief. Are you able to provide a bit more color on the share, uh, looking away from listing as part of this inventory? Thank you. Yeap. Shall I take crosstalkthe CapEx\u2026 Uh, yeah, I mean, we, we, we guide out to 2026 here and, and I should say, uh, the visiting project is scheduled to start up in 2028. So obviously there will be continued CapEx boat in ' 27 and, and ' 2,8 and, and, and probably some drilling beyond that even. Uh, but we, we align the CapEx guidance here with our production guidance, which are also showing out to 2026, but what we are giving guidance on is to the, the full, full scale CapEx of Yohan's inaudible, uh, 65 to 75 billion, not getting to number is or thereabout. So I think you can take your 35%, uh, net from that. And, and you can roughly eyeball it because from, obviously we will have some inaudible numbers in 2023 and, and, and beyond for, for drilling, and there will al- also be the, the, the cake and frost developments in the inaudible area. But as I said, the bulk of this will be the visiting, uh, development. So I think you can eyeball roughly what 2027 and ' 28 expenditure will, will look like with, without knowing the exact facing of that. And of course the PDO obviously hasn't been submitted as yet, so the caveat on this is of course also that, uh, we need to see a more exact facing of the CapEx when we submit the, submit the PDO. And then in terms of your, uh, free cashflow breakeven, I mean, we didn't feel it was appropriate for us given the deal with inaudible BP to guide beyond 2022, otherwise we normally would've, would've done that. But I think it suffices to say, you, you, again, look at the CapEx profile we're showing here and, and you see the, the growing production profile that we are showing that that should explain to you that the CapEx intensity per barrel would remain low and our long term OPEX guidance between $3 to $4 a barrel is also very low number. Uh, and with reducing debt and, and cheaper debt with investment rates in place now, uh, it, all the elements are in place for us to continue to have an extremely low, um, free cash or breakeven price for the business as we look forward. I think your question on the resources, so on the slide, we said 240 million barrels in with 35% of the 500 million barrel discovery. So just shy of 180 of that is wisting the remainder net resources in the remaining four projects. Hope that helps. Okay. Thank you both. Thank you. Our next question comes from the line of Carl Peterson of ABG inaudible, please go ahead. Your line is open. Thank you guys. I just wondered about the production profile for, for this year, if you could elaborate on the magnitude of the, uh, program on inaudible during the second quarter and also on inaudible. Uh, how, how, for how long time will there be down time on those assets. Uh, and then looking ahead, I guess, um, are there, do you have any indications on the development of the regulatory process regarding the merger with, for the transaction, with inaudible BP? So Dan, why don't you get the first one and I, I can take the second. No problem. Um, we're not gonna give exact guidance for exactly how long it's going to be shut down because we have a range in our profiles. I think you can see from Q1 and Q3, where there are no outages, the rough level of where, where our production would normally sit. And I think if you, if you think in the order of a small number of weeks for those outages on both inaudible that's around the right ballpark. And in terms of the, the regulatory process for approval, as I mentioned when I spoke, uh, uh, for the transaction, both sets of shareholders will vote, uh, ours at the end of March and, uh, inaudible BP is, uh, early April. Uh, we, we also have, uh, government approval to, to achieve and also competition authority approval in Norway. And those are the only, uh, real regulatory approvals that, that we have to get. And, uh, and I think, you know, our feeling is that those are really a formality. It just takes a bit of time, and that's why it takes from, uh, from now until around the middle of the year to close the transaction. So, you know, you know, it's very low risk to this deal not going ahead, given the nature of the shareholding of both companies and, uh, and, and the quality of the transaction and, uh, and, uh, and, and, and the inaudible approvals that are required. I hope the, that gives you a clear, clear understanding. Thank you. Yeah. Thank you. Uh, there's currently one further question in the, in the phone lines. So just as a reminder to participants, if you do wish to ask a question, please dial 01 now. Uh, the next question comes from inaudible of Royal Bank of Canada. Please go ahead your line is open. Yes. Uh, good ev- good afternoon guys. Um, just two simple questions really, um, with respect to development and expiration spending in, uh, in 2022, can you give us any flavor of the timing, whether it's just chunked in 25% per quarter, or whether there's any additional guidance or color you'd provide on that, whether there's any heavy quarters. And then, a separate question on gas. I'm just wondering if, if gas sales are purely driven by the GOR or whether, you know, there is some pressure maintenance, uh, tha- that consumes gas that you might be able to redirect towards, uh, additional gas sales, as you've mentioned with the electrification of that degree. Thank you. Dan, why don't you cover both of those? Yep. Um, firstly on the, the gas side, I think most of it's associated gas. We don't have a big gas injection program that we can swing in and move the amounts of produced gas. So I think inaudible the, the amount of gas production you've seen over the past period, you'll probably see going forwards as well. And I think the E & A and development spending, most of, if we focus on the appraisal spending first, most of that is linked to studies and activities towards the PDO, so I think you'll see that roughly spread over the course of the year. And similarly with the, um, with the exploration spend, it'll be spread between the wells and, and with five wells spread over the course of the year. Um, you'll see a rough spread rather than all of it being done in one quarter. And, and the development spend of 590 is that, that's basically whatever it is, 150 a, a- Yeah. Sorry. quarter, is that the best guidance? Yeah. Yeah. So the\u2026 And Titer you jump in if, if there's anything to add. But the, so Yohan's federal makes up a big portion of the development spend there, and most of that'll be spent as you roll between now evenly until you get into, um, the, the final commissioning and startup phase. So you'll see that fairly linearly over the course of the year, and then depending on the, the final outcome on cost, we may see some of that coming out over time, let's see. Um, on the remaining spend, we will finish the development drilling on inaudible and Q1, and so you won't see heavy development spend in the inaudible after, after that period, other than for the inaudible power from shore project, which will be linear through most of the year until we get into the commissioning at the end. So I think you should roughly see most of this all on both the, the development and E&A spread fairly evenly through the year. Obvious ups and downs as you go. Cool. Perfect. Thank you. Thank you. Uh, we've had one further the question come from the phone lines, uh, that's from James Thompson at JP Morgan. Please go ahead. Your line is open. Great. Thanks. Thanks guys for the, uh, presentation. Just a quick one from me. Um, obviously, you know, stronger or price backdrop, um, uh, everyone's making a little bit more money in the upstream. I just wondered if you could maybe talk to us a little bit about the differentials, particularly on the low carbon crew front, you know, the, the idea that, um, you may well start to get a bit of a premium for, for inaudible cargos because of the, the low carbon nature and also the degree. So it feels like the environment's probably better inaudible on that. Could you maybe talk a little bit about, you know, any success or otherwise that you've had in trying to capture some of that Delta? Titer, do you want to, to have a go? Yeah, I, I can. Hi James. Um, I mean, it's been, it's been a story we've been telling for some time now, and we've been working really hard at getting to the great position we, we now are in which, which means that sort of 60% of our production is produced carbon neutrally and is actually fully, fully certified, both in terms of the emissions, and also the offsets that we have, uh, purchased for, uh, for inaudible group. So essentially means that every time we now lift, uh, inaudible cargo, it is essentially a carbon zero cargo, and, uh, whilst it's still not showing through in the numbers we presented today, but we have actually, uh, now sold a few cargos on inaudible group with, with, with our carbon premium implied on the overall price. It's still selling at a, at, at a discount to, to date inaudible but at a lower discount than it otherwise would have. But I would say, the numbers are relatively modest at the moment, but, you know, we continue to, to tell the story and to articulate the benefits to, to our buyers from buying carbon neutral cargos. And we firmly believe that over time that will be mani- manifested in the, in the, in the prices we're gonna achieve. Brilliant. Thanks Titer. Thank you. And there are no further questions on the phones at this time. So I'll hand back to the room for the questions are in the webcast. Thanks very much Mark. I'm just checking on the web here. I think because of our unbelievably good disclosure, there's no further questions from the web either. So, um, with that, I'll, I'll, I'll draw the meeting to a close, but if anyone has any other questions that, that they need answering, please don't hesitate to, to drop me a line, uh, and we'll, we can take it offline. So, um, thanks very much for joining. Uh\u2026"
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